• Lack of clear gross or net profit visibility
• Running out of cash despite showing profits
• Low or no visibility into cash flow
• Inefficient back-office processes
• Confusion over cash vs. accrual accounting

Let’s dive into each challenge—and how to fix it.

The Problem: You can’t confidently answer, “How much did we make last month?” due to inconsistent bookkeeping, poorly classified costs, or late financials.

Symptoms: You’re unsure of product profitability. Pricing feels like a guess. You might be selling at a loss without realizing it.

Solution: Fix your bookkeeping foundation. Classify direct costs as COGS, and distinguish them from overhead. A bookkeeper or controller can restructure your chart of accounts and generate monthly income statements that show gross and net profit.

A company improved profitability just by discovering rising supplier costs and adjusting prices—thanks to regular gross margin analysis.

The Problem: You show profit on paper but don’t have enough cash to pay the bills. This disconnect can stem from receivables, inventory buildup, or non-cash expenses like depreciation.

Solution:

• Create a cash flow statement to identify the gap between profit and cash
• Speed up collections and manage receivables better
• Optimize inventory and vendor payment timing
• Build and update a rolling 13-week cash forecast
• Evaluate the quality of your profits—are they truly cash-generating?

Profit ≠ cash. If your net income is $50K but AR grew by $80K, your bank account might still be empty.

The Problem: You don’t know how much cash you’ll have next week—or even next month. You’re reacting to shortfalls rather than planning for them.

Solution:

• Set up a rolling cash forecast updated weekly
• Use tools like Float, Pulse, or QuickBooks dashboards for visibility
• Establish cash monitoring routines (daily/weekly)
• Include cash metrics in monthly reports
• Foster a culture of cash awareness in your team
• Build a cash buffer or arrange an emergency credit line

The Problem: You’re ready to scale—but your internal systems aren’t. Delayed reports, manual invoicing, and inconsistent data slow you down and increase errors.

Solution:

• Map and streamline key workflows
• Automate tasks using modern software (e.g., accounting, payroll, expense tools)
• Document SOPs and train your team
• Outsource tasks like bookkeeping or payroll if needed
• Clean up and unify financial data across systems
• Track efficiency KPIs (e.g., time to close books, invoice lag time)
• Design processes with future scale in mind

A streamlined back office isn’t just cleaner—it enables faster growth, boosts morale, and lowers costs.

The Problem: You’re unsure which method to use. You may be on cash basis for taxes, but accrual for management—or vice versa—leading to messy reconciliations and bad decisions.

Solution:

• Consult with a CPA or CFO to choose the best strategy
• Use accrual for internal financial management
• Maintain cash-basis records separately for tax if eligible
• Leverage accounting software to toggle cash/accrual views
• Document hybrid strategies (e.g., modified cash basis)
• Plan transitions well in advance to avoid compliance issues
• Revisit your strategy periodically as the business grows

“Manage your business on accrual. Watch your cash like a hawk. Optimize taxes using both.”

Conclusion: Build a Financially Resilient Business