BUSINESS LAB · EVIDENCE BEFORE TACTICS
Why is cash tight when sales are up?
Sales and profit do not establish when cash will be available. Slow collections, longer payment terms, stock purchases, upfront fulfilment and obligations can use cash before receipts arrive. Review a near-term cash schedule alongside contribution and unpaid invoices. Protect essential liquidity before adding commitments based only on rising revenue.
Separate the questions
Revenue records sales under the chosen accounting basis. Profit reflects income less the relevant costs. Cash availability reflects receipts and payments when they happen. A profitable invoice can still be unpaid on the day a supplier bill falls due.
Check the period and basis before comparing totals. A rise in invoiced sales is different from a rise in collected cash. Refunds, deposits, tax obligations and loan repayments may also affect the cash schedule differently from the profit calculation.
Trace the timing gap
Review invoices due, actual collection dates, payment terms, stock commitments, delivery costs and other obligations. Mark uncertain receipts rather than treating every expected payment as available cash. Look for a concentration in a few customers or a seasonal stock build.
Use a manageable starting record and reconcile important totals. Business decisions should not rely on a detailed forecast whose opening cash or major payments are wrong. Estimates can guide a first review when clearly labelled.
Choose a proportionate response
If overdue collection is the constraint, review the collection process and agreed terms. If stock absorbs cash, inspect demand and replenishment assumptions. If each order contributes too little, changing payment timing alone will not fix the economics.
Protect essential delivery and avoid indiscriminate cost cuts that damage profitable revenue. More advertising can increase the need to fund stock or fulfilment before money arrives. Agree a reversible next step and review cash timing, contribution and customer effects together.
Continue the diagnosis
Frequently asked questions
Can a profitable business run short of cash?
Yes. Receipts and payments may occur at different times from the accounting recognition of revenue and costs.
Should I sell more to solve it?
Only after checking contribution and funding requirements. More sales can increase an existing cash timing gap.
Is this accounting advice?
This is an educational diagnostic guide. Use your accountant for accounting treatment and business-specific obligations.
Book a free 15-minute introductory call. The call clarifies the challenge and fit; it is not a free detailed diagnosis.