Cash flow management for owners who are profitable and still tight
Profit is an opinion formed at month end. Cash is a fact that shows up on a Tuesday. Most owners who feel squeezed do not have a profit problem — they have a timing problem nobody has modeled.
Start an advisory reviewBusinesses rarely fail because they stopped being profitable. They fail because cash arrived after the obligation.
“My business is profitable but I have no cash — where is it going?”
“How much cash should I keep in the business?”
“Can I afford this hire, this truck, this location?”
“Why does my bank balance never match my P&L?”
Cash flow is a timing question, not an accounting question
Your income statement records the sale when you earn it. Your bank records it when the customer pays. Between those two moments sit payroll, inventory, materials, taxes and debt service. Cash flow management is the discipline of modeling that gap on purpose instead of discovering it on a Friday.
- Revenue timing versus collection timing
- Inventory and work-in-progress absorbing cash before it produces any
- Debt service and tax payments that never appear in gross margin
- Growth itself — the most common and least recognized consumer of cash
What we actually build
A rolling 13-week cash forecast, a working-capital baseline, and a small set of cash KPIs reviewed on a fixed cadence. The forecast is not a spreadsheet exercise; it is the document that answers whether a decision is affordable this quarter or next.
- Rolling 13-week cash forecast, updated every month
- Working-capital requirement at your current and target revenue
- Collection and payment cycle measurement (DSO, DPO, DIO)
- A decision rule for how much operating cash to hold
How to know this is your constraint
You are profitable on paper but check the bank before making decisions. You have delayed a hire you know you need. You have used a line of credit for operations rather than opportunities. You cannot say, with a number, how much cash a new location or contract will consume.
Go deeper on the piece that applies to you.
Cash Flow Forecasting
Most owners either have no cash forecast or have one built once, in a spreadsheet, that nobody updated after week three.
Read →Cash Flow Problems
Owners are told they have a cash flow problem. That is a symptom. The cause is usually one of five specific things, and each has a different fix.
Read →Cash Flow KPIs
Owners are handed dozens of metrics and use none of them. Cash discipline requires a short list reviewed on a fixed cadence.
Read →Working Capital
Every dollar of new revenue requires cash before it returns cash. Most owners discover the size of that requirement after committing to the growth.
Read →Accounts Receivable
Invoicing is treated as an administrative task rather than a cash function, and aging reports get reviewed only when things get tight.
Read →Accounts Payable
Most businesses pay everything the same way at the same speed, giving up both discounts and float without deciding to.
Read →Operating Cash Flow
Owners track revenue and net income. Lenders, buyers and reality track the cash the operation actually generates.
Read →Cash Conversion Cycle
Inventory, receivables and payables are usually managed by three different people with no shared measure of how long cash is tied up.
Read →Improving Cash Flow
When cash is tight, most businesses start with expense cuts because that is the lever closest to hand — and often the slowest to produce cash.
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