Profitable businesses go broke every day.

I've watched it happen for 40 years. The owner is looking at a P&L that shows a profit. The accountant confirms the year was strong. And then one Tuesday, the bank account hits zero, and payroll is Friday.

Here's what they didn't understand:

Profit is an opinion. Cash is a fact.

Profit says you earned $50,000 in March because you invoiced $200,000 of work and incurred $150,000 of cost. Cash says your customer pays in 60 days, your vendors want their money in 30, your payroll runs every two weeks, and your bank doesn't care what your P&L looks like.

A growing business compounds this problem. The bigger your orders, the more you front in materials, labor, and overhead before you collect. You can be the most profitable you've ever been and the closest you've ever been to insolvency in the same quarter.

Three things to look at this week:

1. Your DSO (how long it takes customers to pay) if it's drifting up, your cash is drifting out

2. Your runway (cash on hand ÷ monthly burn) should be at least 90 days, ideally 180

3. Your timing gaps (when payables hit vs. when receivables land) this is where solvent businesses become insolvent

Your accountant tracks profit. Your future depends on cash. They're not the same thing.

Strategy First! Profit Always!