Your client's P&L shows $500K profit, but they can't make payroll next week – sound familiar?

As financial professionals, we've all been there. You're reviewing the numbers with a client, and everything looks strong on paper. Revenue is up, expenses are controlled, and the bottom line shows healthy profit margins. Then you hear:

“We might not make payroll."

You see the numbers. Profit looks strong. But the bank account tells a different story.

Bills are due. Payroll is looming. There's not enough cash to cover basic operations.

This scenario isn't rare. I see it with businesses of every size, from startups to established companies with decades of history.

The Hidden Gap Between Profit and Cash

Here's the fundamental issue that catches so many businesses off guard: profit on the P&L is not the same as cash in the bank.

GAAP accounting rules create this gap by design. Revenue gets recorded when it's earned, not when cash actually arrives. Expenses hit the books when they're incur...

I've felt the pain of cash shortages as both an employee and an owner. It hurts deeply.

When cash runs low, the stress is real. Bills pile up. People worry. I have seen team members lose sleep. I have felt the weight as a leader, knowing others depend on me.

I spend my days talking about cash flow, profit, and numbers. But behind every dollar, there's a story.

For me, cash is personal, spiritual, and emotional.

Personal: The Fear That Sticks With You

I have lived through tough times. As a director at a company in trouble, I wondered how long my team and I would have jobs. As an owner, I watched the bank account shrink and felt responsible for everyone depending on our company's success.

The fear sticks with you.

It's the knot in your stomach when you review the weekly cash position. It's the sleepless nights wondering if you'll make payroll. It's the weight of knowing that your decisions affect not just your own livelihood, but the families who depend on the paychecks you sign.

One of the biggest problems with cash flow management facing companies throughout the world isn't what you might expect. It's not declining cash flow from falling sales. It's actually the opposite – the challenge that blindsides most companies when they receive orders beyond their cash flow capacity to sustain.

The Growth Paradox

Most business owners focus solely on revenue, revenue, revenue. When they hit that power curve – not growing at a modest 2-3%, but exploding at 10% monthly or 50-100% annually – this creates enormous pressure on their cash flow systems. Let me illustrate how this happens.

Imagine this timeline:

March 1: You receive a $40,000 order – equal to or even greater than your typical monthly revenue. You've just doubled or tripled your month with a single contract. It's not imaginary – it's real business, and it feels fantastic.

March 1-15: You immediately start spending money to fulfill that order. You're purchasing inventory, maybe buying or renting equipment, a...

Here's a shocking statistic: 595,000 businesses fail each year in the United States. Even more surprising? 72% of these businesses are profitable when they close their doors forever.

How is this possible? Simple: They run out of cash.

As someone who coaches accountants and bookkeepers on establishing effective cash flow systems for their clients, I've seen this tragedy unfold countless times. A business looks successful on paper, yet can't make payroll or pay suppliers. The impact ripples through families, employees, suppliers, and customers—creating widespread hardship that could have been prevented.

The Disconnect Between Profit and Cash

When a business owner comes to me distressed about their financial situation, they rarely say, "I'm having cash flow problems." Instead, they say things like:

• "I'm struggling to make payroll"
• "I need capital to grow"
• "Taxes are killing me"
• "I can't sleep at night"

These are all symptoms of cash flow issues. But why don't business owners ...

The Profit-Cash Gap: A Hidden Business Killer

Having spent years working for Fortune 50 and Fortune 100 companies before launching my consulting practice, I noticed a troubling pattern among business owners. There's a massive disconnect between what shows as profit on paper and the actual cash available to run the business day-to-day.

This disconnect isn't just frustrating—it's devastating. Countless profitable companies fail simply because they run out of available cash. The tragedy? Most of these failures are completely preventable with proper cash flow management.

What Is Cash Flow, Really?

Before diving into solutions, let's clarify what we mean by "cash flow." The definition is straightforward: cash flow is the change in available cash in a business between two points in time.

The key element here is the time dimension. Cash flow can be measured daily (today versus tomorrow), weekly, monthly, or over any other period. This time component is critical to understanding why many ...

There's a profound disconnect in business that keeps me up at night: the gap between showing a profit on paper and actually having cash in the bank. This disconnect is causing unnecessary stress and failure for business owners who are doing everything "by the book" yet still struggling to make payroll.

The traditional focus on sales growth and profit margins misses a fundamental reality of business operations. I've seen this play out countless times, but one interaction stands out vividly in my memory.

A successful business owner—running a company with millions in annual revenue—handed me his financial documents with tears in his eyes and a shaking voice: "My accountant says I made $250,000 this year. So where's all my money? I don't have money in the bank, and my accountant can't explain it."

This scenario happens because most business conversations revolve around two primary metrics:

1. Increasing sales - The assumption that more revenue automatically means more available cash
2. Ma...

Looking for a cash flow strategy to boost your business's cash flow? Implementing monthly payment plans could be your ticket to a steadier, more robust financial stream. Here's how this approach can transform your cash flow while making your products or services more accessible:

1. Consistent Revenue Streams.

 Rather than relying on large, sporadic purchases, monthly plans provide a predictable influx of cash. This regularity can significantly smooth out your cash flow, making financial planning and management easier.

2. Increased Customer Base, Increased Cash

 By making high-ticket items more affordable through monthly payments, you'll attract a wider array of customers. More customers mean more consistent cash coming in, even if it's in smaller, regular amounts.

3. Higher Overall Returns

While customers benefit from spread-out payments, you can structure plans to yield a higher total price. This approach can actually increase your long-term cash flow and profitability.

To m...

When I was very young—around third grade—I remember sitting on the stairs at home, dreading some upcoming activity. My mother sat down beside me and said something that would profoundly impact my entire life: "David, nobody can ever make you do something you don't want to do."

That simple statement not only comforted me in that moment but evolved into a powerful mindset that has defined my approach to business and leadership. Somehow, I transformed that message into: "Nobody can tell you that you can't do something." This perspective has given me the confidence to question conventional wisdom and pursue solutions others might overlook.

Throughout my career, I've frequently found myself in meetings where colleagues later approach me saying, "We're so glad you asked that question." When I ask why they didn't speak up themselves, the answer is often, "We're not supposed to do that." Essentially, they're hesitant to question authority—something I've never been afraid to do.

This willing...

The Evolution of Modern Accounting: From Historical Focus to Cash Flow Clarity

The accounting profession stands at a transformative crossroads. While the foundation of accounting has always been rooted in precise historical documentation, forward-thinking professionals are discovering a powerful truth: achieving cash flow clarity can revolutionize how they serve their clients.

Beyond Traditional Accounting

Traditional accounting methods emphasize exactness and compliance. This approach, while essential, often keeps both accountants and their clients focused on the past - documenting transactions, following established rules, and searching for discrepancies. While these functions remain crucial, they represent only part of what modern accounting can offer.

Embracing a Forward-Looking Mindset

When accountants expand their perspective to include cash flow advisory, they unlock new potential for themselves and their clients. This evolution doesn't mean abandoning precision - rather, i...

Every growing business faces a critical decision point around cash flow management. While formal cash controls - like dedicated accounting systems, treasury management, and professional financial staff - can seem prohibitively expensive for small companies, informal methods that work well early on often become increasingly costly and risky as organizations scale. I call this tricky dynamic the Cash Flow Conundrum.

The Appeal of Informal Controls

When a business is small, informal cash management approaches appear highly cost-effective. A founder can track cash flow through basic spreadsheets, manage vendor payments manually, and maintain a good mental model of the company's financial position. The incremental cost is primarily the owner's time, while formal systems and dedicated finance staff would consume precious capital needed for growth.

The Hidden Cost Curve

However, as a business grows, informal controls become increasingly expensive in subtle ways. More transactions mean ...