Cash flow is like oxygen for your business. 

You can make profits, grow, and sell – but without a steady cash flow, your business won’t survive.

Cash flow appears in three ways:

1. Money coming into your business account.

2. Money going out.

3. The current bank balance – how much cash is actually in the bank right now.

One bad day can start a snowball effect that causes serious damage.

Poor cash flow management can ruin even a successful and profitable business.

Profit comes from sales minus expenses. But cash flow comes not only from income and expenses but also from loans and investments.

 It also goes out for things beyond normal expenses – like loan repayments, inventory investments, taxes, fines, and more.

Plus, timing matters. For example, money from a January sale may only hit the bank in February. Sometimes, you pay the supplier before the sale; sometimes, after.

Bottom line: cash flow isn’t just about your profit report – it’s also about the timing of money in and out.

In the end, what lands in the owner’s pocket isn’t what’s on the profit report – it’s what’s in the bank.

Not managing your cash flow is like driving blindfolded – you might move forward a bit, but eventually you’ll crash.

So yes, even a profitable or highly profitable business can end up in a serious cash flow crisis – and shut down.

Poor or zero cash flow management causes about 82% of business failures (based on research from a major U.S. business lender).

Over 80% of businesses fail within 5 years of opening. About 25% close in the first year.

The main reason? Poor or no cash flow management.

1. Unexpected shutdowns - You Risk Crashing from Issues You Didn’t Track

Managing cash flow isn’t just tracking an Excel sheet or forecasting. It’s about understanding the gaps and solving them.  Is the issue due to accumulated losses, too many loan repayments, failed investments, or just timing issues? 

2. Stress:

One of the top things business owners talk about is the stress from getting that morning call from the bank – a bounced check. It’s a technical issue, but it hijacks your day, wastes time, and blocks your ability to grow, operate, and sell.

3. Credit costs:

Proper cash flow planning helps you predict your funding needs and make smart decisions that prevent last-minute financial surprises.

Saving on interest and fees improves profit and fixes cash flow problems. In many cases, we’re talking about tens of thousands a year.

Expecting your accountant to manage your cash flow is like going to a heart surgeon for an unrelated issue.

Think back – when’s the last time you spoke to your accountant about cash flow? Most talks are about profit, taxes, and other things – not cash flow. Your accountant’s job is to review and report on past financials, and sometimes help with taxes.

A cash flow manager’s job is to:

A. Plan and project future cash flow (and profit).

B. Spot gaps, find the cause, and fix what needs fixing.

C. Manage your credit structure and borrowing strategy.

The accountant is like a historian – they see your numbers after the fact. Sometimes, they don’t even get the full picture until months later.

Both accountants and finance experts work with numbers – but from different angles, with different skills and experience.

Business is dynamic – and you need to see the full picture in real time, especially when it comes to cash flow.

When you’re sick, you don’t take every pill in the house – that could make things worse. You go to a doctor and take the right treatment.

Most businesses react to cash flow stress by boosting their marketing or running big promotions – usually both.

But these actions often make the situation worse.

Why? Because marketing increases spending, and discounts lower profit. Combined, they shrink your margin and hurt your cash flow even more.

Short-term, it might look like an improvement – but when the bills hit, it gets ugly.

As with any problem: first understand the cause, then treat it.

1. A 12-month forward-looking plan based on sales forecasts, collection cycles, expenses, loan payments, investments, and taxes .It’s like putting together a puzzle (and not a complicated one).

2. Breaking your cash flow into categories to understand the root problem .Is it unprofitable operations? Aggressive investments? Too much debt? Poor customer payments?

3. Spotting gaps, understanding the causes, and fixing them.

4. If funding is needed – go early, from a strong position, not in crisis mode. This alone can save you tens of thousands a year in financing costs.

I meet many business owners who are  stuck for years with negative cash flow, tracking data in Excel and not understanding why they’re stuck.

• Cash flow isn’t just another report – it decides if your business will survive.

• Most businesses have Excel sheets but don’t know how to read or act on them properly.

• Managing cash flow is like solving a puzzle – it’s not just about profit. Other things can have an even bigger impact.

• Even profitable businesses can collapse from cash flow failure – and often do.

• Managing cash flow correctly and seeing the whole picture increases your chance of success by 82%.

Cash flow is in your hands – don’t wait for a crisis to realize that.