Every business owner wants to increase cash flow to have more cash. But it’s frustrating trying to figure out which “levers” to pull to increase cash flow. It shouldn’t be so hard to have a business that brings in more cash than it spends.

Recent studies show that the lack of cash flow is the one issue business owners take home with them and 54% state this issue alone keeps them awake at night.

About 8 years ago, I had a client that was in the middle of a turnaround and had a spectacular year. They made $500,000 in net profit after a $250,000 loss the year before. But when he looked at his cash flow statement he said, “Why is my cash account only up $50,000? I made $500,000 in profit last year.” I told him to look at his balance sheet and see that his accounts receivable was up $450,000 and the remainder of his profit was sitting there. The light bulb went on!

As a business owner, you understand that profit doesn’t cover payroll or loan payments or any other expense. Cash does. But what exactly is the difference between cash flow and profit?

Read More.