The Profit vs. Cash Flow Paradox

"We're profitable but always out of cash." — Every business owner who's ever had a cash crisis.

Profit is an accounting concept. Cash is reality. You can be profitable on paper and unable to make payroll.

How This Happens

Scenario: A landscaping company wins a $50,000 commercial contract.

• They buy equipment and supplies: -$15,000 (cash out)
• They complete the job and invoice the client
• The client pays NET-60 (two months later)
• Meanwhile: payroll, insurance, fuel, equipment maintenance = -$18,000/month
• Result: $33,000 profitable job, company almost folds waiting to get paid

The Three Cash Flow Killers

1. Slow receivables — customers taking 60-90 days to pay
2. Fast payables — you pay vendors immediately
3. Inventory/materials — cash locked up in stuff before you've been paid

The Insight

82% of small business failures cite cash flow problems as a factor (U.S. Bank Study). Most were profitable. They just ran out of cash.

The 13-Week Forecast: Your Financial Crystal Ball

A 13-week (quarterly) rolling cash flow forecast is the standard tool for managing liquidity. It shows where you're headed before you get there.

The Simple Structure

Inflows to include:

• Expected invoice payments (when customers will actually pay, not when billed)
• Recurring revenue
• Known seasonal spikes

Outflows to include:

• Payroll (exact dates)
• Rent/mortgage
• Loan payments
• Vendor invoices due
• Tax payments
• Known large expenses

Tool Options

• Spreadsheet — free, full control, manual updates
• Float ($59/mo) — syncs with QuickBooks/Xero automatically
• Pulse ($29/mo) — simpler, visual, great for non-accountants

The Rule

If any week shows negative ending cash, you have 13 weeks to prevent it. That's the entire point.