If your accountant says you’re profitable but your bank balance says otherwise, you’re not the first business owner to feel confused and frustrated.
This usually shows up as a pattern. You have decent sales. You’re working hard. You might even be “up” year on year. But you still find yourself watching the bank balance, delaying payments, or worrying about payroll and tax dates.
Most advice online explains why this happens, then leaves you with a list of possible causes and no way to confirm what’s actually happening in your business. That’s the bit that matters. If you don’t prove the cause, you’ll fix the wrong thing.
This guide is built around one simple goal: work out where the cash is getting trapped, using numbers you can pull quickly.
If the phrase “business data” already makes you want to close the tab, read this first and come back: https://grifflepop.com/business-data-basics/
Step 1: Make sure it’s a cash problem, not a profit problem
Before you dig into cash flow, you need to rule out the uncomfortable possibility: the business might not be properly profitable on what it sells.
A lot of businesses think they have a cash problem when they actually have a margin problem. They’re busy, but pricing is too low, jobs overrun, costs have crept up, or discounts are doing more damage than anyone realises. In that situation, improving “cash flow” without fixing margin just delays the pain.
If you’re not confident on margin, start here: https://grifflepop.com/what-causes-low-profit-margin/
If margin is genuinely fine, and cash is still tight, then what you’re dealing with is usually timing and working capital.
Step 2: The “where is the cash stuck?” test
This is the fastest way to narrow it down.
When cash is low but profit looks fine, the money is usually in one of four places:
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customers who haven’t paid yet
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stock/materials/work in progress
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large cash-out items that don’t show up as “expenses”
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growth timing (your cash cycle can’t keep up)
Let’s prove which one it is.
Bucket A: Customers owe you money (unpaid invoices)
This is the most common one for invoicing businesses.
On paper, you record revenue when you invoice or deliver the work. In real life, you only get cash when the customer pays. If customers are paying slowly, you can look profitable while your bank account stays low.
What this looks like day-to-day:
You’re constantly chasing. The business feels busy. You’re sending invoices, but cash comes in late and in lumps. You end up paying wages, suppliers, and rent while waiting for money that “should be” in the account.
Prove it in 5 minutes:
Open your invoicing system and pull:
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total unpaid invoices
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unpaid invoices older than 30 days
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the top 10 overdue customers by value
If those numbers are big compared to your cash balance, this is not a mystery. Your cash is sitting with customers.
Bucket B: Cash is tied up in stock, materials, or work in progress
This hits product businesses, trades, manufacturing, and anyone who buys upfront.
If you spend cash on materials or stock today, but you won’t get paid until later, your bank balance drops even if profit looks fine over the month.
What this looks like:
You keep ordering “to stay ahead”. You don’t want to run out. You might even be getting better prices by buying in bulk. The problem is that cash ends up sitting on shelves, or sitting inside work that isn’t finished and billed yet.
Prove it in 5 minutes:
Pull:
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what you spent on stock/materials in the last 30 days
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what you sold or delivered in the last 30 days
If purchases regularly run ahead of what you deliver, you’ve found the drain.
Bucket C: Cash left the bank but didn’t show up as an “expense”
This is the one that makes owners feel like they’re going mad.
Some of the biggest cash drains don’t show up on your profit figure the way you expect. Examples include:
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loan principal repayments
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buying equipment/vehicles/tools
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VAT or tax payments
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owner drawings
These can hammer cash while profit looks perfectly reasonable.
Prove it in 10 minutes:
Open your bank and scan the last 60–90 days. Total up:
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loan repayments (if possible, split interest vs principal)
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asset/equipment purchases
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VAT/tax payments
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owner withdrawals
You’re looking for chunky outflows. If one category is consistently large, that’s your answer.
Bucket D: Growth timing is starving you
This one surprises people because it can happen in a “successful” period.
If your costs are paid weekly (wages, suppliers), but customers pay you in 30–60 days, growth creates a bigger and bigger gap. You can be profitable and still have no cash because you’re funding the time delay.
Prove it:
Ask:
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are unpaid invoices rising month on month?
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did you hire or take on more overhead before cash collections caught up?
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are you using overdraft/credit more than you used to?
If yes, you’ve got a cash cycle problem, not a “sales” problem.
Step 3: The 30-minute diagnostic
If you do nothing else, do this. It forces the truth.
Pull these numbers from real data (no estimating):
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bank balance today
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unpaid invoices total
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unpaid invoices over 30 days
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stock/material purchases last 30 days (if relevant)
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big cash-out items last 90 days (VAT/tax, principal, equipment, owner draws)
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next 4 weeks expected inflows and outflows (rough is fine, but write it down)
At this point, you should be able to say in one sentence where the cash is stuck. If you can’t, it usually means your info is scattered and you need a cleaner tracking setup.
Step 4: The few KPIs worth tracking weekly
You don’t need a dashboard full of metrics. You need the handful that tell you whether cash is improving or getting worse.
Cash basics
Track these weekly:
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bank balance
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cash runway (weeks): bank balance ÷ average weekly cash outflow
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lowest expected bank balance in the next 4 weeks (from your forecast)
If you invoice
Track:
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unpaid invoices total
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unpaid invoices over 30 days
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cash collected from invoices this week
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invoices raised this week
That last pair matters because it tells you whether the gap is widening. If you’re raising £10k/week but collecting £6k/week, you don’t need motivation. You need a collections plan.
If you buy stock or materials
Track:
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stock/material spend this week
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stock/material spend last 30 days
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a simple comparison: purchases vs work delivered (or purchases vs sales)
If you want a baseline KPI set that covers the essentials without noise, start here: https://grifflepop.com/essential-sme-kpis/
Step 5: Build a simple tracker (10 minutes a week)
You can do this in one spreadsheet tab. Keep it boring. Boring is reliable.
If you want help keeping spreadsheets simple and usable, read: https://grifflepop.com/small-business-spreadsheets/
A) The 4-week cash check
Create a table with four columns: this week, next week, week 3, week 4.
Rows:
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opening bank balance
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expected customer receipts
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other income
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payroll
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supplier payments
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rent/utilities/subscriptions
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VAT/tax set-aside
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loan repayments
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owner withdrawals
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one-off costs
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closing bank balance (calculated)
Update it weekly. It won’t be perfect. It doesn’t need to be. The point is to stop being surprised.
B) Add a small “cash stuck” section underneath
Each week, write down:
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unpaid invoices total
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unpaid invoices over 30 days
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stock/material spend this week (if relevant)
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big one-off cash-outs this week
Now you’re not just staring at a bank balance. You can see what’s pushing it up or down.
C) Pre-Made Tracker
Get the Cash Tracker Template (Excel)
Step 6: What to do once you’ve found the bucket
Most posts stop at “reasons”. Here’s the part that actually helps.
If it’s unpaid invoices
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tighten payment terms for new work
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chase a small number of big overdue invoices properly
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consider deposits or staged payments
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stop doing more work for customers who are already overdue
If it’s stock/materials/work in progress
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reduce overbuying
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shorten the time between buying and billing
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stop carrying slow-moving stock “just in case”
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price jobs that need heavy upfront spend accordingly
If it’s VAT/tax, principal repayments, assets, owner draws
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plan these outflows in advance (don’t treat them as surprises)
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set a rule for drawings based on cash, not profit
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separate “profit” from “cash available to spend”
If it’s growth timing
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slow growth slightly until collections catch up
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align supplier terms with customer payment timing where possible
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avoid hiring ahead of cash reality
If underpricing is part of the picture, read this next: https://grifflepop.com/true-cost-of-a-job/
When a dashboard is worth it
If you can’t see cash, overdue invoices, and the drivers behind them without manual effort, a dashboard can be worth it.
How to decide: https://grifflepop.com/need-a-dashboard/
If your tracking is messy and nobody trusts the numbers, fix that first: https://grifflepop.com/fix-reporting-mistakes/
What to do next
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do the “where is the cash stuck?” test
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pull the 6 diagnostic numbers
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build the 4-week cash check
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track unpaid invoices over 30 days weekly (if you invoice)
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make one targeted change based on the bucket
If you can’t explain where the cash is stuck in one sentence, you haven’t proved it yet.
If you want help setting this up properly
If you want a hand turning this into something you can rely on (simple tracking, tidy reporting, and a clear picture of what’s driving cash), here’s what I offer: https://grifflepop.com/services/
If you’re not sure what you need yet, just send me a message via the contact page. A few details helps me give you the right next step:
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invoices, upfront, or a mix?
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do you hold stock/materials?
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what do you use today (Xero, QuickBooks, spreadsheets, etc.)?
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when does “no cash” usually hit (and what triggers it)?
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