Why You Need To Stop Treating Profit And Cashflow As The Same Thing with Shishir Khadka [CPD Available]

Dec 29, 2025

In this engaging discussion, Shishir Khadka, a specialist accountant for dental practices, unpacks the critical distinction between profit and cash flow. He explains why many dentists feel profitable yet cash-poor, using the analogy of profit as teeth and cash flow as gums. Shishir shares insights on effective bookkeeping, correct revenue recognition, and the importance of a 13-week cash forecast. Additionally, he emphasizes developing habits for tracking cash flow and making data-driven decisions to ensure financial health and business growth.

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INSIGHT

Profit Isn’t The Same As Cash

Profit and cash flow are distinct: profit measures completed work while cash flow is actual money in the bank.
Timing (tax bills) and recognition logic create the common disconnect between feeling broke and being profitable.

ADVICE

Recognise Revenue When Treatment Completes

Recognise revenue only when treatment is completed, not when a deposit is received.
Avoid recording deposits as revenue to prevent inflated profits and accelerated tax bills.

ADVICE

Don’t Recognise Revenue On Collection Alone

Don’t record income in Xero/QuickBooks simply when cash hits the bank as revenue.
Maintain correct revenue recognition to avoid overstating profit and paying tax earlier than due.

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UK Dentists: Collect your verifiable CPD for this episode here >>> https://courses.dentistswhoinvest.com/smart-money-members-club

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Feeling profitable but strangely broke? We dig into the hidden gap between production and collection that trips up so many UK dentists, then show how to fix it with clean bookkeeping, correct revenue recognition, and a simple 13-week cash forecast. You’ll hear why tax hits in late December and January drain liquidity, how deposits can inflate reported profit and accelerate tax, and what it takes to line up costs with completed treatment so your numbers tell the truth.

Together we reframe the whole picture: profit is teeth, cash flow is gums, and both must be healthy. We break down common accounting mistakes in Xero and QuickBooks, explain when revenue should be recognised, and map out a weekly process to track net cash collected versus total outflows, including assets and loan payments. You’ll learn to ringfence working capital for the next 90 days, set aside tax with confidence, and identify genuine excess cash you can deploy into growth without fear.

We also tackle mindset and habit. When the bank balance is high, owners overspend; when it’s low, panic kicks in. Data replaces emotion. With a living forecast, you can choose the right lane for your practice, avoid nasty surprises, and time investments like scanners, marketing, or training to match your cash runway. If you’ve ever asked “Why do I feel broke when my accounts show profit?”, this conversation gives you the clarity, language, and tools to change it.

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