A retailer I worked with was going broke while sitting on a pile of assets.

On paper the business looked healthy. The P&L showed a profit. The shelves were full of inventory. His accountant had just told him he'd had a good year.

Then he'd log into the bank account and there wasn't enough there to cover next week.

He couldn't understand it. Profitable companies aren't supposed to run out of money. Except they do, all the time, and here's the short version of why.

Profit is an accounting conclusion. Cash is the money actually in the bank. Those are two different numbers, and the gap between them is where healthy-looking companies quietly bleed out.

How can a company be profitable and still broke?

That retailer's "profit" was sitting on his shelves.

He'd bought inventory with real cash, and until it sold, that cash was gone. The balance sheet called it an asset. His bank account called it missing.

Assets aren't profit. Say I buy a gold coin for $200 and a year later it's worth $4...

The retailer had clean books, shelves full of inventory, and financial statements that looked fine. The business was going broke anyway.

The statements were accurate. They answered a different question than the one keeping the owner up at night: will there be enough cash to make payroll on Friday?

That gap shows up everywhere. A service company needs 60 to 90 days of capital for every sale it makes. A manufacturer can't make enough of its best product while its margins keep shrinking. Different industries, same pattern. The reports look backward, and the owner needs to see what's coming.

Your financial statements were built for someone else

Your P&L and balance sheet are generally prepared under GAAP. That's the right standard for their job, which is satisfying compliance, lenders, and tax requirements.

They were never designed to tell you whether payroll clears this Friday.

So the reports and the bank account can tell 2 different stories. A company can show a profit while cash b...

I have seen it happen too many times. A company builds a sales-first culture and chases deals with relentless energy. They celebrate big wins, ring bells for high revenue numbers, and post their milestones on the company bulletin board.

Then cash runs short.

The celebration stops. Bills sit unpaid. Payroll gets tight. Stress permeates every conversation. The question shifts from "How much did we sell?" to "How are we going to make it through next week?"

This is not a sales problem. It is a cash flow culture problem. And it is more common than most business owners want to admit.

The Root Problem: Misaligned Priorities

Here is what I have learned: the problem is not that they are bad at sales. The problem is that their culture celebrates the wrong milestone.

They celebrate when the deal closes. They should celebrate when the cash hits the bank.

They measure success by revenue on an income statement. They should measure success by money moving in and out of accounts.

This gap betw...

If you didn’t have a cash flow management model before, what are you waiting for?

Or do you still think you can actually manage your company with a P&L, balance sheet, and statement of cash flows? If you believe the best way to run a company is with backward-looking, historical documents, then you probably also think that the safest way to drive a car is through your rearview mirror!

History- yes, you can learn from it, and not repeat your mistakes, but it can’t tell you what’s coming down the road!

Cash Flow Management: Look forward!

What’s coming in?!

What sales are being made?!

Who owes you money that needs a reminder call?!

What are expenses today, next week, and next month?!

What will your bank balance be after you run payroll?!

Some people are saying, “But David, it’s too late!” It’s never too late to put good business practices into place unless you’re giving up without even trying.

Am I being too harsh? Maybe.

But sometimes it takes a wake-up call to take action. Sometimes it takes some...

Did you know that cash flow management is mostly a mental game?Yes, you need to do all of the numbers, the pluses and minuses, but that's the easy part of cash flow. The hard part is the management of your cash flow. Here are some cash flow management activities that take emotional intelligence and clear thinking to get right:1. Confidence in projections2. Good relationships and open communications with vendors3. Creative solutions for bringing cash in faster4. Ideas to pay vendors later5. Working with all stakeholders (employees, vendors, creditors, etc.)A key observation about business owners in financial trouble is they can't handle the situation emotionally. They don't prioritize or make decisions well. I help them make decisions.Do you need help implementing a cash flow management system? Call or message me on WhatsApp (+1.801.510.3566).What do you think is the hardest part of implementing a cash management system? Let me know.   E-mail me your comments at david@davidsafeer.com

Do you ever read cash flow articles to learn how to improve your cash flow?

If you do, beware of the advice you read! Most articles have "common knowledge" lists that are often bad decisions for many businesses! There is usually a final recommendation that directly relates to something that the author is selling.

Worst of all, the fixes are usually cosmetic but don't dig down into fundamental profitability.

If you want to fix YOUR cash flow, I suggest the following to start:

1. List all of the issues that you know are causing your problems
2. Start fixing the biggest problem and the easiest problem to fix at the same time.
   - Fixing the easiest problem will give you momentum
   - Fixing the biggest problem will help you the most
   
   Here is the key issue: Are you fixing the underlying problems or just the symptoms?
   
   If you are just fixing symptoms, you will have the problem over and over again.
   
   Any thoughts?

   E-mail me your comments at david@davidsafeer.com

Sometimes cash flow issues are not about the cash. They are about the people involved in a business, the emotions, and the mindset.

"I am very appreciative of the time David was willing to spend with me. From the first contact, he was warm, welcoming, and sincere and that carried over to and throughout our initial consultation. David's advice and feedback were certainly helpful in regard to the nuts and bolts of my situation, but also, and possibly more importantly, in regard to my personal mindset and view of the challenges faced. 

I am impressed with David’s vision of how he can help small and large businesses alike become more efficient and effective. I am equally impressed by the way he is going about accomplishing that vision! I am happy to give my recommendation."

Cash flow and business challenges can be very emotional. It is never "just business."

Are you totally detached and unemotional about your business?

E-mail me your comments at david@davidsafeer.com

What's the one thing that business owners never talk about when I ask them to tell me about their business?

Cash management.

I don’t blame them. They didn’t start their business to manage cash. They started their business to do something they really enjoy and get paid for it – like create websites, sell real estate, practice law, do collision repair, or any of a million things that people enjoy doing to make money.

When I start working with a business that has a cash crunch and may not survive, I first work with the business owner’s mindset.

I help them understand that while managing their cash isn’t what they want to do, it will keep their business alive so they can do what they love to do. It allows them to spend more time and energy on what they love, but only after their cash management systems are in place.

Check out my article about 5 Key Mindsets.

Want to talk about managing cash in your business?

Then tell me, what's your biggest cash management challenge?

E-mail me your comments ...

What's the one thing that business owners never talk about when I ask them to tell me about their business?

Cash management.

I don’t blame them. They didn’t start their business to manage cash. They started their business to do something they really enjoy and get paid for it – like create websites, sell real estate, practice law, do collision repair, or do any of a million things that people enjoy doing to make money.

When I start working with a business that has a cash crunch and may not survive, I first work with the business owner’s mindset.

I help them understand that while managing their cash isn’t what they want to do, it will keep their business alive so they can do what they love to do. It allows them to spend more time and energy on what they love, but only after their cash management systems are in place.

Want to talk about managing cash in your business? Then tell me, what's your biggest cash management challenge?

E-mail me your comments at david@davidsafeer.com

Profit does not mean that there is cash in the bank. A growing bank account does not mean that you are making a profit.

Surprised? You're not alone. Most schools, CPAs, news reports, etc. focus on a company’s earnings, profits, and sales. That’s because those same institutions are geared toward teaching, working for, and reporting for BIG big businesses and public companies.

But if you are a small business, your most important measurements for the next 3 months or so have to do with cash:
 

• How much cash is coming into or going out of the company?
• What is your cash balance projected to be?
• Do you have cash or credit reserves to get you through cash shortfalls?

So don’t be fooled by “the establishment” into thinking “profit, profit, profit.”

Think: “Profit with sustainable cash flow!”

Let me know if “profit without cash” is a new concept to you, or if it’s not, how you learned about the concept!

E-mail me your comments at david@davidsafeer.com