Good sales, no money left at the end of the month

You sold well this month. The stall was busy. The GCash notifications kept coming. Then you checked the account on the 30th, and there was almost nothing there.

This is one of the most common money problems I hear about in our community, and it is not a sign that you are bad with money. The money is not gone. It is somewhere else — sitting on your shelves as stock, or sitting in somebody's utang. Your business can be busy, honest, and still short of cash. Once you can see where the money went, you can decide what to do about it.

The money is not gone. It is in a different place.

The Department of Trade and Industry, through its Bureau of Micro, Small and Medium Enterprise Development, publishes a glossary of business terms for small business owners. It defines current assets as: "Valuable resources or property owned by a company that will be turned into cash within one year or used up in the operations of the company within one year. Generally includes cash, accounts receivable, inventory, and prepaid expenses."

Read that list again. Cash. Accounts receivable — money customers owe you. Inventory — your stock. All three are your money. Only one of them is in your hand.

That is the whole problem in one line. Your books can look fine while your wallet is empty, because your money has quietly moved out of the till and into rice sacks, canned goods, and a notebook full of names.

Three different numbers, and all three get called "profit"

It is easy to track only one number: how much came in. That number cannot tell you if you are all right. You need three.

Revenue

Revenue is the total value of what you sold. It is the biggest number and the least useful one on its own. It has not paid for anything yet.

Gross profit

DTI defines cost of goods sold as "the direct cost to the business owner of those items which will be sold to customers," including "materials, labor, and overhead costs that have gone into the products that have been produced during a period." Then: "Sales less COGS equals gross profit."

So gross profit is what is left after you pay for the ingredients or the goods themselves. For a carinderia, that is the rice, meat, vegetables, oil, and gas. For a sari-sari store, it is what you paid the distributor.

Gross profit is not your money either. Rent has not been paid. Your helper has not been paid. You have not been paid.

What is actually left

DTI's definition of net profit is short: "Gross profit minus costs." And its definition of net income is worth reading slowly, because of what it includes: "The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes, and other expenses."

Taxes are on that list. Tax is not something you pay out of what is left over. It comes out before anything is truly left over. How much you should set aside depends on how you are registered and how you are taxed, and that is a question for the Bureau of Internal Revenue or a licensed accountant — not for a blog post, and not for me. But the habit of setting something aside every month, before you spend, is the part you can start now.

A sale is not cash

This is the sentence the whole guide turns on. DTI defines the accrual basis of accounting as a method that shows "expenses incurred and income earned for a given fiscal period, even though such expenses and income have not been actually paid or received in cash."

You can earn money this month and receive none of it. That is not a mistake in your record-keeping. That is how sales work.

The opposite method is the cash method, where, in DTI's words, "sales and expenses are incurred when payment is received or invoice is paid."

It is easy to keep your sales record one way and think about your money the other way — you write down every sale, including the ones on utang, then wonder why the total in the notebook does not match the money in the box.

When a suki takes goods and pays on payday, DTI calls that accounts receivable: "Money owed to a business for goods or services that have been delivered but not yet paid for." It is a real sale. It is real money. It is just not real cash yet.

Why your GCash balance is not your profit

An e-wallet balance feels like a scoreboard. It is not.

DTI describes cash receipts as "the money received by a business from customers," and lists its components as "cash sales, collections of accounts receivable, and other cash receipts."

Look at what is mixed together there. Some of the money that landed in your GCash this month is payment for what you sold this month. Some of it is a suki finally paying for what she took last month. And some of it may not be business income at all — it may be your own money, transferred in to cover a restock. The balance cannot tell those apart, and neither can you, unless you write them down separately.

There is a second problem. Money in an e-wallet may still have to be moved before you can use it for some things, and platforms may charge for some transfers. Fees and rules change, so check the current schedule inside your own GCash or Maya app rather than trusting any figure you read elsewhere, including here. The same goes for online marketplaces — if you sell on Shopee, Lazada, or a delivery app, any commission, payment, and shipping charges that may be deducted before payout are real costs of doing business. Get the actual numbers from your own seller centre statement, not from an estimate.

A hypothetical month: Aling Nena's carinderia

Everything below is invented to show the arithmetic. It is not a real business, not a member's result, and not a prediction of what any business will do. The margins are assumptions of this example, not typical figures.

Say Aling Nena runs a carinderia. Her recorded sales for the month come to ₱180,000. Of that, ₱24,000 was taken on utang by regular customers. During the same month, ₱9,000 of older utang was finally paid.

She spent ₱120,000 on supplies, but only ₱108,000 worth was actually cooked and sold. The other ₱12,000 is still in the storeroom.

Her ladder for the month:

• Sales recorded: ₱180,000
• Less cost of goods sold: ₱108,000
• Gross profit: ₱72,000

Now the operating costs:

• Rent: ₱12,000
• Electricity and water: ₱7,500
• One helper: ₱14,000
• LPG: ₱3,600
• Monthly set-aside for permits and renewals: ₱1,200
• Load, cleaning supplies, packaging: ₱2,200
• Total operating costs: ₱40,500

That leaves ₱31,500. Then two more deductions that get skipped:

• Aling Nena pays herself ₱18,000 for the month. Left: ₱13,500.
• She sets aside ₱4,000 for tax, an amount she confirmed with her bookkeeper, not one she copied from the internet. Left: ₱9,500.

The order of those last two lines is a household budgeting choice, not a tax rule. It does not mean that paying yourself lowers the tax you owe. Whether an owner's pay counts as a business expense at all depends on how you are registered, and that is a question for the Bureau of Internal Revenue or a licensed accountant.

On paper, the month made ₱9,500. Now here is the till.

• New utang given out: ₱24,000. Old utang collected: ₱9,000. So the amount customers owe her grew by ₱15,000.
• Stock on the shelf grew by ₱12,000 — the supplies she bought but did not sell.

₱9,500 profit, minus ₱15,000 that moved into utang, minus ₱12,000 that moved into stock, leaves her ₱17,500 lighter in cash than when the month began.

Nothing was stolen. Nothing was wasted. She was not lazy. She had a decent month on paper and still could not restock on the 30th without borrowing. That ₱27,000 did not vanish. It changed shape — ₱15,000 of it is now money her customers owe her, and ₱12,000 of it is sitting on her shelf. DTI calls those current assets: "Valuable resources or property owned by a company that will be turned into cash within one year..." They are real, and none of them will pay a supplier on the 30th.

The three habits that create the gap

Paying yourself last

This one has no government source behind it. It is just what I have watched happen for years, so take it as an opinion and not a rule.

When you pay yourself only from what survives the month, your own pay becomes the shock absorber for every bad decision in the business. A supplier raises prices, a customer does not pay, you overbuy — and the cost lands on your household instead of on your pricing. Worse, the business never learns that it is underpriced, because it always appears to break even.

Treat your pay as a cost, the same as rent. Put a number on it. If the business cannot cover that number, that is real information about your prices or your costs, and you want to see it early.

Restocking out of the till and not writing it down

You take ₱2,000 from the box to buy stock at the market. You are in a rush. You do not write it down. Multiply that by the number of times it happens in a month, and your record of the month is fiction.

This one is not just a good habit. The BIR's Taxpayer's Guide for Online Sellers states plainly that "Taxpayers are required to keep and use relevant and appropriate sets of bookkeeping records authorized by the Secretary of Finance." The same guide says books of accounts and other accounting records must be preserved for five years. Do not throw away the notebook at the end of the year. When that five years starts running, and what else applies to you, depends on how you are registered — ask your BIR Revenue District Office which rules cover your books.

Giving suki credit with no ceiling

Utang is not a mistake. It is how relationships work in a barangay, and refusing it outright can cost you the customers who keep you steady on slow days.

The problem is not credit. The problem is credit with no limit and no record. Two practical habits, offered as operating habits and not as legal rules: give every suki a written limit, and keep one page per name with a date beside every entry. When someone reaches the limit, the account has to come down before it goes up again. You cannot enforce a limit you never set.

And the quiet one: overstocking

DTI's glossary describes inventory turnover as "the ratio of annual sales to inventory" and notes that "Low turnover is an unhealthy sign, indicating excess stocks and/or poor sales." A shelf that never empties is not security. It is your cash, waiting.

Do this before your next restock

Pick one hour this week, ideally a slow afternoon, and do three things on paper.

1. Count your stock and write down roughly what you paid for it. That number is your money.
2. List every utang, by name, with the date and the amount. Add it up. That number is also your money, and now you know how much of it is out on loan.
3. Write down what you paid yourself this month. If the honest answer is nothing, or whatever was left, that is your starting point.

Then set one limit — a peso ceiling on total utang you are willing to carry, and a peso figure for your own monthly pay — and hold both for one month. Do not change your prices yet. Just watch what happens to the cash.

You cannot fix a gap you cannot see. Counting is the whole first step.