“We’re busy, but where’s the cash?” — understanding the cashflow gap
Many owners share the same frustration: the team is busy, sales look strong, but the bank balance still feels tight. On paper, things seem fine. In practice, it's stressful. This is the cashflow gap, and it's common even in fundamentally healthy businesses.
Why the gap happens
- Timing differences: work is done and revenue is recorded before customers actually pay.
- Rising costs: overtime, rush orders, or ad spend quietly eat into margin during busy periods.
- Inventory or work-in-progress: cash is tied up in stock or projects that haven't yet been invoiced and collected.
- Owner compensation: the business appears profitable until the owner takes a reasonable, consistent paycheck.
Three numbers that clarify what’s going on
- Operating cash flow: how much cash the business actually produces after expenses.
- Accounts receivable: how much you're owed, and whether that balance is rising or falling.
- Inventory or work-in-progress levels: how much cash is parked in things customers haven't yet paid for.
Tracking these monthly gives you a much more honest story than revenue alone.
Practical ways to close the gap
- Shorten the payment cycle with prompt invoicing, clear terms, and consistent follow-up.
- Watch margin more closely during busy periods so extra effort doesn't quietly erode profit.
- Align inventory and project schedules with realistic expectations of when cash will come in.
- Set a predictable owner's draw so performance is measured after you pay yourself, not before.
Most owners facing a cashflow gap aren't mismanaging their business — they're operating without a clear, integrated view of how revenue, costs, and timing interact. Once you can see those pieces together, decisions become calmer and more deliberate.