It’s the worst feeling: your business looks profitable on paper, yet you’re scrambling to cover payroll, suppliers, and bills.
This usually happens when profit gets mistaken for cash. They’re connected, but they’re not the same thing. A company can be profitable and still run out of money.
The Big Order Trap
Let’s say you land a €50,000 project.
- Your costs to deliver it: €30,000
- Expected profit: €20,000
On paper? Amazing.
But here’s the catch: the client pays you in 30 days, while your bills don’t wait. Salaries, contractors, suppliers, rent, software – you pay those now.
So you end up in this absurd situation:
- Looks great in reports
- Feels terrifying in real life
Because an invoice isn’t money.
It’s just a promise to pay later.
3 Dangerous Beliefs That Drain Cash
1) “We’re profitable, so we’re fine.”
Profit tells you whether the business makes sense overall.
It does not tell you when money hits your bank account.
2) “I can pay myself from the profit.”
You can only pay yourself with cash you actually have.
Profit sitting in unpaid invoices can’t cover your expenses.
3) “More sales will fix it.”
If your payment timing is broken, growth can make everything worse.
More sales can mean:
- more salaries
- more delivery costs
- more marketing spend
That’s how businesses grow broke.
The Rule You Should Tattoo on Your Brain
Profit is accounting. Cash is survival.
Profit helps you scale.
Cash keeps you alive long enough to scale.
If you can only manage one properly right now – manage cash.
How to Actually See What’s Happening
If you only look at a profit report, you’re missing the real story. You need three angles:
- Profit & Loss (P&L): Are we making money each month?
- Cash Flow Statement: Where did the money actually go?
- Balance Sheet: What do we own, what do we owe, and what’s stuck (inventory, unpaid invoices, prepayments)?
And you need a simple cash routine:
- Weekly: update your cash forecast for the next 8-12 weeks
- Track who owes you money and how long they’ve owed it
- Set clear payment rules:
- partial prepayment
- milestone billing
- shorter payment terms
- incentives for early payment
If You’re “Profitable but Broke”…
It’s usually not a “bad business” problem.
It’s an operations + timing problem: billing terms, collections, project cash gaps, inventory, or working capital.
At John Galt Finance, we help founders spot the leak fast: we map where cash is going, build a practical cash plan, and set up controls so you stop bleeding money while “growing.”
Book a free chat, and we’ll pinpoint why your cash keeps disappearing – and what to change first.