Profit and cash flow are not the same thing. A business can be profitable on paper and still run out of cash — because customers pay late, inventory is purchased before revenue arrives, or loan payments don’t align with revenue cycles. Cash flow analysis makes the difference visible. Cash flow forecasting makes it manageable.
FJ & Associates, PLLC provides cash flow analysis and rolling forecasts to Utah businesses — giving owners the visibility to make confident financial decisions before a cash crunch becomes a crisis.
📞 (801) 927-1337 | Schedule a consultation →
Understanding Your Cash Flow Statement
The cash flow statement is divided into three sections:
- Operating Activities — Cash generated by or used in the core business operations. This is the most important section for most businesses — it shows whether the business is actually generating cash from its operations, independent of financing and investment decisions.
- Investing Activities — Cash used for capital expenditures (equipment, real estate, vehicles) and proceeds from asset sales. Negative investing cash flow is normal for growing businesses making capital investments.
- Financing Activities — Cash from loans, repayments, equity contributions, and owner distributions. Shows how the business is being funded and how debt is being managed.
Free cash flow = Operating cash flow minus capital expenditures. The real measure of how much cash the business generates after maintaining its asset base.
Cash Flow Forecasting
A cash flow forecast projects your expected cash inflows and outflows over a future period — typically 13 weeks (short-term operational) or 12 months (strategic planning).
- 13-week cash flow forecast: Week-by-week projection of expected receipts (customer payments, scheduled AR collection) and disbursements (payroll, vendor payments, loan payments, taxes). The essential tool for managing near-term liquidity.
- 12-month cash flow forecast: Month-by-month projection integrated with your revenue model and expense budget. Used for strategic planning, lender presentations, and growth decision-making.
Key inputs for an accurate forecast:
- AR aging (when will outstanding invoices actually be paid?)
- Accounts payable schedule (when are bills due?)
- Payroll schedule and headcount plan
- Debt service schedule (loan payments by period)
- Seasonal revenue patterns from prior-year data
- Known capital expenditures and their timing
Common Cash Flow Problems — and Solutions
| Problem | Cause | Solution |
|---|---|---|
| Profitable but cash-poor | Slow AR collection; rapid growth consuming working capital | Tighten payment terms; invoice faster; consider AR financing |
| Seasonal cash shortfall | Revenue concentrated in certain months | Build cash reserves in high-revenue periods; establish credit line before needed |
| Tax payment surprise | No quarterly estimates; unexpected taxable income | Quarterly tax projection and estimated payment planning |
| Capital expenditure timing | Large purchase without cash planning | Plan purchases against cash forecast; evaluate financing options |
| Vendor payment pressure | AP due before AR collected | Negotiate extended vendor terms; use available payment terms strategically |
Cash Flow FAQs
How often should I review my cash flow?
At minimum monthly — weekly for businesses with tight margins or high transaction volume. A 13-week rolling cash flow forecast reviewed weekly is the standard for businesses managing active cash constraints.
My business is profitable but I’m always short on cash. Why?
The most common causes: slow-paying customers (AR timing), rapid revenue growth consuming working capital faster than cash arrives, large inventory purchases ahead of sales, or seasonal patterns where expenses continue during low-revenue periods. We diagnose the specific driver and address it.
Can you build a cash flow model for a lender or investor?
Yes. Lender-ready 12-month cash flow projections, with assumptions documented and integrated with your financial statements, are a standard deliverable from our business advisory engagements. See our business consulting services for the full scope.
Know Where Your Cash Is Going — Before It’s Gone
📞 (801) 927-1337 | ✉ admin@cpaone.net
Schedule a Free Consultation →
See also: Monthly Financial Statements | Profitability Analysis | Business Budgeting & Forecasting
Missy Dennis, CPA | Partner | FJ & Associates, PLLC | Kaysville, Utah. Missy holds a Master of Accounting degree from the University of Utah and is a licensed Certified Public Accountant. She is committed to providing clear, accurate, and actionable guidance so clients can navigate complex financial decisions with confidence. With more than twenty years of public accounting experience, Missy Dennis specializes in: Tax preparation and tax advisory; Bookkeeping strategy alignment; Estate and trust taxation; Audit and consulting services; Low-income housing tax credits; Non-profit accounting; Small- and mid-sized business advisory.
