One of the most confusing — and frustrating — situations for landscaping and gardening limited company directors is being told:
“Your business is profitable…”
…while simultaneously feeling:
- Short of cash
- Stressed about VAT or Corporation Tax
- Unsure how you’ll pay yourself consistently
- Anxious every time HMRC deadlines come around
If this sounds familiar, you’re not doing anything “wrong” — but you are experiencing one of the most common financial disconnects in small trade-based limited companies.
In this blog, we’ll explain why a company can be profitable but have no cash, why this happens so often in landscaping and gardening businesses, and — most importantly — how to fix it.
Profit and Cash Are Not the Same Thing
Let’s start with the biggest misconception:
Profit does not equal cash in the bank.
They are related — but very different.
Profit
Profit is an accounting figure:
- Income earned
- Minus expenses incurred
- Over a period of time
It includes:
- Invoices raised but not yet paid
- Costs you owe but haven’t paid yet
- Non-cash items like depreciation
Cash
Cash is simple:
- What’s actually in your bank account right now
You can be:
- Profitable on paper
- Cash-poor in reality
And this happens a lot in landscaping and gardening companies.
Why This Is So Common in Landscaping & Gardening Businesses
1. You Pay Costs Before You Get Paid
In this industry, you often:
- Pay staff weekly or monthly
- Pay for fuel, materials, and plant hire upfront
- Pay for van finance, insurance, and tools regardless of workload
But your clients may:
- Pay 14–30 days later
- Delay payment
- Only settle invoices at the end of a project
That gap creates cash pressure, even when jobs are profitable.
2. VAT Is Sitting in Your Bank (But Isn’t Yours)
VAT is one of the biggest reasons profitable landscaping companies feel broke.
Here’s what often happens:
- You invoice a client £12,000 + £2,400 VAT
- £14,400 hits your bank
- It feels like you’ve earned it
But that £2,400:
- Belongs to HMRC
- Is not profit
- Will be due in a future VAT return
If VAT isn’t ringfenced, it often gets spent — leaving a nasty surprise later.
3. Seasonality Distorts Cash Flow
Landscaping and gardening businesses are highly seasonal:
- Spring and summer: strong income
- Autumn and winter: reduced work, weather disruption
If you don’t plan for this:
- Summer cash gets spent too freely
- Winter becomes stressful
- Directors struggle to pay themselves consistently
Profit over 12 months may look healthy — but timing is everything.
4. Equipment Purchases Drain Cash
Big-ticket items like:
- Vans
- Trailers
- Ride-on mowers
- Diggers and specialist tools
Often:
- Cost significant cash upfront
- Reduce profit through capital allowances
- Improve the business long-term
But in the short term, they can wipe out cash, even while profits look strong.
5. Director Drawings Taken Without a Plan
Many directors take money:
- When cash feels available
- Without checking profit
- Without allowing for tax
This often leads to:
- Overdrawn director’s loan accounts
- Cash shortages
- Tax problems later
The business ends up funding the director — instead of the other way around.
The Classic “Profitable but Broke” Scenario
This is one we see time and time again:
- The company shows £80,000 profit
- The director thinks things are going well
- VAT hasn’t been set aside
- Corporation Tax hasn’t been planned
- The director has taken regular drawings
Then:
- VAT becomes due
- Corporation Tax bill lands
- Cash isn’t there
Suddenly, a “profitable” business feels like it’s failing — when in reality, it’s a planning issue, not a performance issue.
Understanding Where the Cash Has Gone
To fix the problem, you first need clarity.
Ask yourself:
- How much of the bank balance is VAT?
- How much tax is building up?
- How much have I taken personally?
- What bills are due in the next 3 months?
Without this visibility, you’re flying blind.
The Hidden Role of Corporation Tax
Corporation Tax is another silent cash killer.
Because it’s paid:
- Months after the year end
Many directors:
- Forget about it
- Spend the cash
- Get caught out later
A profitable landscaping company can easily build up a five-figure Corporation Tax bill without realising it.
Why Cash Flow Matters More Than Profit Day-to-Day
Profit is important for:
- Long-term growth
- Valuation
- Sustainability
But cash flow is what keeps the doors open.
You can:
- Survive a bad month with good cash flow
- Go under with strong profits but no cash
That’s why cash planning should be reviewed more often than profits — especially in seasonal trades.
How to Fix the “Profitable but No Cash” Problem
1. Separate Your Money Mentally (and Physically)
Create clear rules:
- VAT is not your money
- Tax is not your money
- Director pay is planned — not ad hoc
Many businesses benefit from:
- A separate VAT savings account
- A tax reserve account
This removes temptation and stress.
2. Move Away from “Bank Balance Accounting”
If your main decision-making tool is:
“What’s in the bank?”
You’re at risk.
Instead, you need:
- Regular profit figures
- Tax estimates
- Cash forecasts
This doesn’t need to be complicated — it just needs to exist.
3. Match Director Pay to Profits (Not Cash)
This is crucial.
Director pay should be based on:
- Actual profits
- Forecast tax
- Seasonality
Not on:
- Busy months
- Large client payments
- Temporary cash spikes
This avoids overdrawn loan accounts and future tax problems.
4. Plan for Quiet Periods in Advance
Busy season cash should:
- Cover quiet months
- Fund tax bills
- Provide stability
If winter income drops, your planning should already reflect that — not react to it.
5. Review Pricing and Payment Terms
Sometimes the issue isn’t spending — it’s how and when you get paid.
Consider:
- Faster invoicing
- Deposits for large jobs
- Clear payment terms
- Chasing overdue invoices early
Improving payment timing alone can transform cash flow.
Why This Is Easier with Ongoing Support
Most directors don’t struggle because they’re bad at business.
They struggle because:
- No one explains the numbers clearly
- They only see accounts once a year
- Problems are identified too late
Ongoing support allows:
- Regular check-ins
- Early warning signs
- Adjustments before cash becomes tight
This is especially valuable in landscaping and gardening businesses, where conditions change quickly.
How We Help Landscaping & Gardening Limited Companies
At Accounting Matters, we help directors:
- Understand the difference between profit and cash
- Plan for VAT and Corporation Tax
- Create sustainable director pay strategies
- Remove the stress around money
Our goal isn’t just compliance — it’s clarity and control.
Final Thoughts
If your landscaping or gardening limited company is profitable but feels constantly short of cash, you’re not alone — and you’re not failing.
This problem usually comes down to:
- Timing
- Planning
- Visibility
Once those are addressed, many directors feel an immediate sense of relief — and confidence.
Profit keeps score.
Cash keeps you sane.
Ready to Get Control of Your Cash?
If you’d like help understanding where your cash is going — and how to stop the stress — we’re always happy to have a no-obligation chat.
Accounting does MATTER 🌱