Cash flow · Starter guide
Profitable—but still short of cash?
Seven places to look when the income statement says the company is profitable but the bank account disagrees.
Follow the timing.
Review receivables, inventory, supplier payment timing, payroll, debt payments, capital spending and owner distributions. These seven areas can explain why reported profit and available cash move differently.
Look forward by week.
List expected cash collections and payments for the next 13 weeks. Use realistic collection dates. Separate committed payments from estimates. Keep opening and ending cash visible so the low point does not arrive as a surprise.
Compare forecast with reality.
Update the forecast weekly. Identify which collections arrived late and which payments were unexpected. Assign follow-up to a named person and carry the revised timing into the next forecast.
Questions for your next management discussion
- Which overdue receivables need an owner and a next action?
- What inventory has stopped moving?
- In which week is cash expected to be lowest?
15 minutes. Owner to operator.
Start with the problem.
If this sounds familiar, tell me what is happening in your business. We can start with a short conversation.
Erich Stolz, CTP
832-372-5419
CFO@1CFOcenter.com