Cash Flow

Money actually moving in and out, which can look very different from profit.

Also known as: cash flow, cash flow statement, cash management

Cash flow tracks money actually moving: in from customers, loans and investors; out to payroll, vendors, taxes and lenders. It diverges from profit constantly — profitable on paper while cash-starved (receivables!), or cash-rich while loss-making (annual prepayments!). Companies die of empty bank accounts, never of ugly P&Ls.

profitable but dying:  $50k profit, customers pay in 90 days, payroll weekly → cash gap kills
unprofitable but alive: $30k loss, annual prepayments banked → cash funds the turnaround

Manage it weekly once tight: 13-week rolling cash forecast (receipts expected, payrolls, tax dates, big vendor bills), updated with actuals. The forecast turns surprises into scheduled problems — a shortfall seen eight weeks out has options; discovered Friday has none.

The classic mistakes:

Profit-confidence. “We’re profitable, we’re fine” with receivables aging and payables due. Profit is opinion (accrual choices); cash is fact. Watch the fact.
Lumpy-revenue blindness. Enterprise deals landing quarterly against monthly payroll creates predictable crunches. Map receipt timing explicitly; bridge planned gaps before they arrive.
Tax and THR surprises. Periodic obligations (taxes, THR, annual renewals) ambush cash planning yearly. Calendar every known outflow twelve months out.
Growth eating cash. Faster growth often worsens cash (receivables, inventory, hiring ahead). Profitable growth can still kill — plan working-capital needs alongside P&L targets.
No scenario buffer. Single-point forecasts Shatter on contact with reality. Maintain base/downside cash paths with trigger actions defined (scenario analysis).

The rule: profit is opinion, cash is fact, runway is the verdict. Review cash weekly, forecast thirteen weeks rolling, and never let the bank balance surprise you — see runway and burn for the metrics built on it.