The Cash Flow Contractor 266 - The Cash Flow Mistake Killing Businesses
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Jul 31, 2025 Many businesses fail even while showing profits, and the culprit is often poor cash flow management. Listen as they dissect the critical differences between cash flow and profit, revealing how a profitable business can still struggle financially. The episode highlights real-life examples, explaining the gaps that can exist between reported profit and actual cash. It also offers tips for leveraging technology to improve cash flow analysis and efficiency, ensuring business owners understand the vital cash flow dynamics for lasting success.
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Profit Isn't Enough to Survive
- Profit alone does not guarantee business survival; cash flow is crucial.
- Toys R Us made $751 million profit but went bankrupt due to cash flow issues.
Cash Flow vs Profit Clarified
- Cash flow measures actual money movement, not just income or expenses.
- You can buy or sell without immediate cash changes due to credit and receivables.
Profit Without Cash Increase Example
- A company made $100K profit but cash only rose by $8K due to increases in receivables and debt payments.
- Various payments like loan paydowns and draws explain where cash disappeared despite profit.