Back to Your Questions

We’re profitable, so where did the cash go?

Compare what the business earned with what went into and out of its bank accounts over the same period. A sale can count toward profit before the customer pays. Inventory can use cash before it becomes an expense. Equipment purchases, debt principal, and owner distributions can also reduce cash without reducing this period’s profit by the same amount.

Why are we profitable but always short of cash?

Reconcile profit to the change in cash. Look at collections, inventory, investment, borrowing, and owner payments. Separate recurring shortfalls from one-time outlays.

Why does taking on more work make cash tighter?

Put deposits, payroll, supplier payments, invoices, and expected collections for one job on a timeline. If the gap grows as you take on more jobs, estimate the cash you need before customers pay.

Would a line of credit solve this?

Check what cash would repay the borrowing and when it would arrive. A predictable delay in collections calls for a different response from a recurring shortfall after normal operating expenses.

Where to go next

If you’re still working out how growth affects cash and value, keep exploring those questions in Insights.

Browse Insights on growth and business value