Your company can make a profit while its bank balance falls. Customers may not have paid yet, equipment purchases use cash, and loan repayments reduce the bank balance without being the same thing as an operating expense. To understand the month, read the profit and loss report alongside the balance sheet, the movement in cash, and the amounts due from customers and to suppliers.
This guide explains how those reports fit together, using a fictional Thai business and figures in baht. It also gives you a repeatable order for your monthly review, so the discussion ends with decisions and responsibilities rather than a stack of unexplained numbers.
Profit, cash flow and the bank balance answer different questions
Profit describes the result for a period under the accounting basis used in your reports. Under accrual accounting, revenue and expenses can be recognised before the related cash is received or paid. Depreciation is another difference: it allocates an asset's cost to accounting periods without creating a new cash payment each month.
Cash flow describes money moving in and out during the period. The bank balance is the amount at a particular date. A profitable month does not necessarily increase that balance, and a larger balance does not necessarily mean a profitable month. A new loan, for example, provides cash but does not create sales revenue.
For a further explanation of accrual timing and noncash charges, see the Association for Financial Professionals' comparison of cash flow and profit.
The IFRS Foundation's explanation of IAS 7 distinguishes operating, investing and financing cash movements. That distinction helps a director explain where cash went. The reporting framework and statutory statements required for your Thai company should be confirmed with its accountant; this guide is a management example, not a claim that every Thai SME must produce the same monthly statutory cash-flow statement.
| Report or schedule | The question it helps answer | What to compare |
|---|---|---|
| Profit and loss (P&L) | Did the business earn a profit during the month? | Current month, prior periods and the relevant budget |
| Balance sheet | What does the company own and owe at the reporting date? | Opening and closing balances, with unusual changes explained |
| Cash movement report | Why did cash increase or decrease during the month? | Opening cash, receipts, payments and closing cash |
| Receivables ageing | Which customer balances remain unpaid? | Due dates, disputed invoices and expected collections |
| Payables ageing | Which supplier balances are due? | Payment dates, agreed terms and disputed amounts |
| Short-term cash forecast | Can the company meet upcoming commitments? | Expected receipt dates and actual payment deadlines |
Scroll this table sideways to see all columns.
Agree the contents and frequency of your reporting pack. These reports and schedules are useful options, not a promise that each is included in every bookkeeping and reporting package.
A fictional example: THB 150,000 profit, but THB 100,000 less cash
Imagine a service company reviewing one month. The figures below are entirely fictional. For clarity, the example leaves out VAT, income tax, interest, inventory, foreign exchange, dividends and other movements. The starting point is profit before tax, not after-tax profit. It is an illustration of the reconciliation, not a tax calculation or an actual YPN client report.
The company's P&L shows:
| P&L item | THB |
|---|---|
| Revenue recognised | 400,000 |
| Operating expenses, excluding depreciation | (230,000) |
| Depreciation | (20,000) |
| Profit before tax | 150,000 |
Scroll this table sideways to see all columns.
Only THB 220,000 of the revenue has been collected. Customer receivables therefore increase by THB 180,000. The company pays THB 200,000 of its operating expenses, leaving a THB 30,000 increase in operating payables. There are no other operating receipts, payments or working-capital changes in this simplified month.
It also pays THB 80,000 for equipment and repays THB 40,000 of loan principal. The depreciation above relates to its asset portfolio; it is not a second cash payment for this equipment purchase.
| Reconciliation from profit to cash | THB | Why it changes the explanation |
|---|---|---|
| Profit before tax | 150,000 | Start with the month's accounting result |
| Add back depreciation | +20,000 | This month's expense does not create a new cash payment |
| Subtract the increase in receivables | −180,000 | Part of the recognised revenue has not been collected |
| Add the increase in operating payables | +30,000 | Part of the recognised expenses has not been paid |
| Cash generated by operations | 20,000 | Also equals THB 220,000 collected less THB 200,000 paid |
| Equipment paid for | −80,000 | Investing cash outflow in this example |
| Loan principal repaid | −40,000 | Financing cash outflow in this example |
| Net change in cash | −100,000 | The total movement for the month |
Scroll this table sideways to see all columns.
If opening cash was THB 300,000, closing cash is THB 200,000. The profit and the falling bank balance are consistent: they measure different things. The reconciliation explains the difference.
The management response is not automatically to cut every cost. It is to establish when the THB 180,000 will be collected, when the THB 30,000 must be paid, and how the equipment and debt payments affect the next few weeks.
Read the monthly pack in this order
1. Check the period and whether the accounts are ready
Before comparing figures, confirm that the reports cover the same month and currency. Ask whether the bank accounts are reconciled, whether material documents are missing, and whether the report is final or still includes provisional entries.
A bank statement by itself does not prove the accounts are complete. Nor does a neatly formatted P&L. An unexplained balance or missing invoice can change the interpretation.
2. Understand what produced the profit
Read revenue, gross margin where relevant, operating expenses and unusual items. Compare the result with an appropriate period or budget. A seasonal business should not assume that the preceding month is always the best comparison.
Ask which changes reflect normal trading, which reflect timing, and which are one-off. Avoid treating a temporary increase in revenue or decrease in expenses as a permanent improvement without an explanation.
3. Explain the movement in cash
Start with opening cash and reconcile to closing cash. Separate routine trading receipts and payments from equipment purchases, loan movements and owner funding. In the fictional example, trading generated cash; investment and debt repayment used more of it.
A negative cash movement can be planned, such as an affordable equipment purchase. A positive movement can come from borrowing. Neither sign, taken alone, settles whether the business is performing well.
4. Review what is unpaid and what is due
Ask for receivables by due date, not just their total. Separate overdue, disputed and not-yet-due balances. Give each collection issue a named owner and a next action.
Do the same for suppliers and other commitments. The THB 30,000 unpaid in the example has helped this month's cash position, but it remains an obligation. A payment deferral is not a permanent improvement in profitability.
Include upcoming payroll, applicable tax payments and financing commitments in the cash discussion. Use the Thai tax forms guide to identify the relevant filing topics, then confirm the company's actual obligations and dates.
5. Turn the review into a short-term forecast and actions
Historical reports explain what happened. A cash forecast considers what may happen next, using expected customer payment dates and actual commitments. Keep those two views separate.
Record assumptions, especially uncertain receipts. If a major customer pays later than expected, show what changes and which payment or funding decision needs attention. The useful output is a decision with an owner and review date.
Questions to bring to your accountant
Use these questions as a starting point for the monthly review:
- Which figures are provisional, and which missing documents could change the result?
- What explains the difference between profit and the change in cash?
- Which overdue invoices need action, and who will contact the customer?
- Which payments are due before the next expected collections?
- Did equipment, loan or owner transactions cause an unusual cash movement?
- What assumptions would change the forecast most if they turned out to be wrong?
- What should we decide now, and what information do we still need?
For an overseas head office, also agree the language, reporting period, currency and level of detail. Multilingual accounting support can help clarify the required format; it should not leave the Thai and group reports describing different periods without an explanation.
Agree the reporting scope before the next closing
Tell your accountant which decisions you need the monthly pack to support. For example: controlling receivables, planning an equipment purchase, comparing actual costs with a budget, or understanding cash available before the next payroll.
YPN provides business advisory covering performance analysis, forecasting and budgeting alongside accounting support. The reports, review frequency and responsibilities should be agreed for your company.
Discuss your company's reporting and cash-flow review. Describe the decision you need to make and the reports you already receive. Arrange an appropriate channel before sending confidential financial records.