Hey Lykkers! Let's play a quick game of "What's Wrong With This Picture?" Imagine your business just had its best year ever.

Sales are through the roof, your income statement is glowing green with profit, and on paper, everything looks amazing. But there's one tiny problem: your bank account is empty.

You're struggling to pay suppliers, make payroll, and keep the lights on.

How can a profitable business be flat-out broke? It's a paradox that has tripped up countless entrepreneurs. But don't worry—by the end of this, you'll understand exactly why it happens and how to make sure it never happens to you.

Profit Is an Opinion; Cash Is a Fact

Here's the thing: profit is a concept. Cash is reality.

Profit is calculated using "accrual accounting," which is a fancy way of saying revenue is counted when you earn it (e.g., send an invoice), and expenses are counted when you incur them (e.g., receive a bill). But that doesn't mean money has actually moved.

You can be "profitable" because you've billed a client $50,000. But if they won't pay for another 90 days, that $50,000 is just a number on a screen. You can't use it to pay your team today.

Cash flow, on the other hand, is simple: it's the real money moving in and out of your bank account. No guesswork. No maybes. You either have it, or you don't.

"Companies don't go out of business because they lose money. They go out of business because they run out of cash."— Philip Kotler, American marketing author and professor, in Marketing Management.

The Three Silent Cash Flow Killers

Even when sales are strong, these are the usual suspects quietly draining your bank account:

1. Rapid Growth: Yes, growth can actually ruin your business. Big new orders often require you to spend more upfront—on inventory, staff, or marketing—long before you see a single dollar from the sale. That gap can be a killer.

2. Slow-Paying Customers: The longer your invoices go unpaid, the wider your cash flow gap becomes. Your profit is trapped in your clients' accounts—not yours.

3. Tying Up Cash in Inventory or Equipment: Buying a lot of stock or new machines looks great on your balance sheet. But if that inventory sits around or the equipment doesn't immediately boost revenue, you've turned usable cash into stagnant assets.

Your Action Plan: 4 Proactive Steps to Secure Cash Flow

1. Become a Fortune Teller (Sort Of)

Create a simple cash flow forecast. It doesn't need to be complicated—just a spreadsheet predicting when money will come in and, most importantly, when it must go out over the next 3-6 months. This helps you see problems coming while there's still time to react.

2. Get Paid Faster – No Apologies

Don't be shy about your money. Send invoices immediately. Offer small discounts for early payment. And have a polite but firm process for following up on late payments. Your cash flow isn't a charity.

3. Manage What You Owe (Smartly)

Use your payment terms to your advantage. If a supplier gives you 30 days to pay, use that time to keep cash in your account longer. Just always pay on time to maintain good relationships.

4. Get a Safety Net Before You Need It

The best time to get a line of credit is when you don't need it. Having access to extra cash means you can smooth out the bumps without missing a beat.

The Golden Rule

Remember: profit measures success, but cash pays the bills. By keeping a close eye on your actual cash flow—not just your bottom-line profit—you're not just running a business on paper. You're building one that lasts in the real world.

Stay profitable, stay liquid, and keep thriving, Lykkers!