Is the business actually getting richer? Your bank balance won't tell you
Every owner watches the bank balance. It's the number that decides whether tonight's sleep is good or bad. It's also — quietly — one of the least honest numbers in the business.
A big customer pays a week early: the balance looks wonderful. A supplier run goes out on the 28th: it looks dire. Neither event says anything about whether the business is actually getting richer — they're just timing.
The question that matters
The question an owner really needs answered before hiring, buying a vehicle, or taking on stock is:
Is the business building value month on month — and can it afford this?
Your books already hold the answer. It just isn't in any one number. It's in the relationship between three:
- Bank — what you have,
- Debtors — what's owed to you,
- Creditors — what you owe.
Add them up — bank plus debtors minus creditors — and you get your net position: what the business is worth in working capital. Track that month by month and the timing noise falls away. A customer paying early moves money from debtors to bank; your net position doesn't flinch. Now you're looking at the truth.
Averages, peaks and lows
One more trick makes the picture honest: don't look at the balance on a given day — look at each month's average, its peak, and its low. The average smooths out who happened to pay when. The low tells you how close you came to running dry. The peak shows what the good weeks look like. Three numbers per month, and suddenly "how are we doing?" has a real answer.
We built this into our platform
This thinking is exactly what the Money Value report in Vali — the platform we build client systems on — was designed to do: bank, debtors, creditors and net position tracked month by month, each with its average, peak and low, a trend line, and a plain-English outlook that tells you whether things are climbing and why. Every figure drills down to the invoices and receipts behind it, so the number is never a mystery.
But the principle matters more than the product: if your current system can't answer "are we getting richer?" in one screen, it's answering the wrong questions.
Try it on your own books
Pull three numbers for each of the last six months: bank, debtors, creditors. Put them in a row and compute bank + debtors − creditors. Six numbers, one line. If the line is climbing, you've earned the right to invest. If it's flat while turnover grows, something — pricing, collections, costs — deserves a hard look.
If getting that answer takes your current system more than a few minutes, tell us what you're running — whether it needs custom work or just better reporting, we'll give you a straight answer.