One of the most common questions from business owners:
“If we’re profitable, why does cash still feel tight?”
Because profit and cash flow are not the same thing.
Many businesses have record sales and healthy profits on paper while simultaneously struggling to make payroll, buy inventory, or fund growth.
Why?
Because cash gets tied up in:
• Unpaid customer invoices
• Inventory
• Equipment purchases
• Debt payments
• Growth investments
Profit tells you whether your business is making money.
Cash flow tells you whether your business can survive and grow.
This is why many business owners know their revenue and profit numbers but still feel like they’re making decisions based on their bank balance.
A good CFO doesn’t just help you understand what happened last month. They help you understand where cash will be 30, 60, and 90 days from now so you can make better decisions today.
This is a great short article that explains the difference.