Cash flow is the number that sinks businesses — even profitable ones. Here's how to actually see it before it becomes a problem.
What 'cash flow' really means
Profit is what you earned. Cash is what's in the bank. They differ because of:
- Money your customers owe you (sales on credit)
- Money you owe suppliers (unpaid bills)
- Stock you've bought but not sold
- Loan and tax payments that don't appear on the profit line
Three reports worth checking every month
1. Aged receivables
Who owes you, and for how long? A customer 60 days overdue is a collections job, not a client.
2. Aged payables
What you owe, and when. Pair this with your due dates so you never pay late by accident — or pay early when you shouldn't.
3. A 13-week cash-flow forecast
It doesn't need to be elaborate. List expected money in, expected money out, and the running balance. Most surprises hide in week 9–13.
The principle: a business doesn't fail because it runs out of profit. It fails because it runs out of cash.
Make these three reports a monthly habit and you'll see a tight spot coming weeks before it arrives.