Timing changes the picture
A business may recognise revenue before a customer pays. At the same time, supplier payments, payroll and other outgoings can fall due. Profit measures performance over a period; a cash view helps you understand the money available to meet commitments.
Look at working capital
Review customer balances, supplier terms and inventory where relevant. Growth can require more cash when customers pay later than suppliers need to be paid. Examine the timing, rather than assuming higher sales will immediately improve the bank balance.
Separate operating activity from financing
Loan receipts can increase cash without representing revenue. Loan repayments and purchases of long-term assets can reduce cash in ways that differ from the current-period expense report. Keep these movements visible in management discussions.
Build a short rolling forecast
List expected receipts and payments by week, using realistic dates. Mark uncertain receipts clearly and refresh the forecast as information changes. Compare actual outcomes with the forecast to improve your next estimate.
Use the gap to guide action
If profit is improving while cash is falling, investigate collections, payment timing and spending commitments. A useful financial review connects the accounts with specific actions: follow up invoices, review terms or adjust the timing of discretionary expenditure.
Put the next step into practice.
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