Cash ≠ Profit
6 min read
This is the most important business concept most Egyptian brand owners don't learn until it's too late: having cash in your account doesn't mean you're profitable. And being profitable doesn't mean you have cash. Here's why.
The scenario most brands recognize
You have a big month. 500 orders shipped. The courier remittance hits your account — 150,000 EGP. You feel rich. But you haven't paid your supplier for the next batch yet (60,000 EGP), your staff salaries are due (20,000 EGP), and your Meta ads bill is 30,000 EGP. Suddenly your 150,000 EGP isn't yours — it's already spoken for.
Why COD timing distorts everything
When you ship today, you don't get paid for 5–7 business days. Returns are deducted before you see the money. So the cash in your account today reflects orders from last week — not this week. Meanwhile, you're buying new inventory for next week's orders. The gap between shipping and receiving payment creates a cash lag that traps growing brands.
Revenue ≠ what the courier remits
Your revenue is what customers paid for delivered orders. The courier's remittance is that revenue minus delivery fees minus return losses. If you shipped 100 orders at 500 EGP each (50,000 EGP revenue), 30 were returned, and the courier charges 35 EGP per delivery + 25 EGP per return — your remittance is: (70 × 500) − (70 × 35) − (30 × 25) = 35,000 − 2,450 − 750 = 31,800 EGP. Your revenue is 35,000 EGP. Your cash from that batch is 31,800 EGP.
Accrual vs. cash accounting
Cash accounting records transactions when cash moves. Accrual accounting records them when the economic event occurs — when you ship an order, not when the courier pays you. For a true P&L, you need accrual thinking. Your revenue this month is what you shipped this month, even if you receive payment next month.
How to fix your thinking
Track revenue when orders are shipped (or delivered, depending on your policy). Track COGS when products leave your warehouse. Track expenses when they're incurred. Compare this against your cash balance monthly — the difference is your working capital situation. A growing business can be cash-negative even while profitable, because growth requires reinvestment before returns arrive.
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