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How to Avoid 3 Common Budget Pitfalls Income on the books but no cash in the bank? Here's how to avoid a cash crunch.

By Mike Sowinski

Opinions expressed by Entrepreneur contributors are their own.

Let me guess: Your profit and loss (P/L) statement has been in the black for months, yet a quick look at your bank statement tells you that you've got only enough money in the bank to cover four--maybe six--weeks of operations. Don't fret, my friend. I see this narrative play out all the time, particularly among new entrepreneurs.

The root of the issue is that you're basing the company's health on its P/L statement, not on its balance sheet. P/L statements show revenue and expenses, but only a balance sheet lists everything a company owns and what it owes. As a CFO, I usually find the answers to cash issues buried in a complete balance sheet.

Turn the page for some common places where a disconnect can occur between net income on the books and actual cash in the bank--and how to correct them.

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