The Finance Gem đź’Ž #95: How to Make Cash Flow the King

Author

Oana Labes, MBA, CPA
May 31, 2025

in partnership with

Hello Finance Gem collectors. Welcome to Issue no. 95.

Here’s what we’re covering in today’s issue:

Better client experiences start with better operations. And better operations start with smarter systems.

Want to fix your cash flow? Start by fixing how the business runs.

  • Unify customer data across functions

  • Automate engagement and service workflows

  • Use tools that turn insight into fast, compliant action

HubSpot's Financial Services Growth Guide shows how to do it — with real examples and measurable results. Download for Free Here.

Subscribe to download PDF copies of this week’s infographics/carousels below

(the download option is only visible to to paid subscribers - upgrade here - and get over $2,000 in value. )

Your financials aren’t broken. They’re just not strategic.

Most mid-market companies are stuck with reporting tools built for compliance—not decision-making.

📉 Static budgets
📉 Lagging metrics
📉 Delayed reporting

When growth stalls or cash dries up, they scramble. Not because they lack data—because they lack direction.

That’s why I built Financiario—the strategic finance engine for real-time planning, forecasting and insight.

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If you're done mistaking accounting for finance, go here: financiario.com

How to Understand your Cash Flow Statement.

Your P&L Looks Strong. So Why Are You Short on Cash?

Most CEOs scan the income statement and walk away feeling reassured. Revenue is growing. Margins are healthy. Net income is positive. Everything looks on track.

Until it isn’t.

A cash shortfall catches you off guard. You can’t fund growth. Investors start probing. A transaction collapses during due diligence. And suddenly, the business feels unstable.

What went wrong?

It’s simple: the P&L doesn’t tell the full story. In fact, it often hides the part that matters most—cash flow.

Why the P&L Misleads

The income statement measures performance, not financial health. It shows whether your business was profitable on an accounting basis—not whether it can sustain itself, grow, or weather pressure.

Here’s what it misses entirely:

→ Actual cash movement:
Depreciation, amortization, and stock-based compensation can inflate profit without impacting cash. You can look profitable and still be unable to make payroll or fund working capital.

→ Reinvestment and CapEx:
Capital spending doesn’t show up on the P&L—but it drains your bank account. If you’re scaling aggressively or reinvesting in infrastructure, it can quietly push you into a cash crisis.

→ Financing flows:
Loan repayments, dividend distributions, and equity raises don’t touch your income statement. But they reshape your liquidity and solvency in real time.

The Bottom line is this - the P&L is only part of the picture. It gives you performance optics. It does not give you the full financial reality.

What Actually Tells You How You’re Doing: The Cash Flow Statement

If you want to understand whether your company is viable and sustainable—not just profitable—you need to look at your cash flow statement. Every section tells a different part of the story:

1. Operating cash flow
This is the cash your core business generates, adjusted for non-cash items and working capital movements. If this number isn’t strong, you don’t have a self-funding operation—no matter what the P&L says.

2. Investing cash flow
This covers CapEx, acquisitions, and asset sales. It’s often negative in growth-stage companies—and that’s not inherently bad. But if your investments don’t align with strategic priorities or don’t yield future cash, you’re just draining capital.

3. Financing cash flow
This shows how you’re funding the business—through debt, equity, or distributions. It reflects whether you’re in control of your capital structure, or whether your capital structure is controlling you.

The Strategic Reframe

Profit is an accounting result.
Cash Flow is a business outcome.

Future enterprise value is driven by free cash flow. That’s how investors think. That’s how boards evaluate performance. And increasingly, that’s how your competitors are operating.

So if you’re still managing to the P&L, you’re running your business with partial visibility.

Master your cash flow—before someone else has to explain it to you. Learn more here.

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Budgets & Rolling Forecasts: How Finance Can Influence EBITDA, Cash Flow & Enterprise Value

Finance has been talking about becoming strategic for years.
Everyone wants a seat at the table—few know how to actually drive the business forward.

That’s what we’re changing.

This fall, I’m back at AFP’s flagship conference for the third year in a row—this time with a session built for finance leaders who are ready to move beyond reporting and start shaping outcomes.

We’ll dive into how budgets and rolling forecasts can become tools for value creation—not just compliance:

→ How to connect planning to real EBITDA impact
→ How to forecast for cash flow, not just revenue
→ How to influence enterprise value from the finance seat

If you're tired of hearing “be more strategic” without being shown how, this is the session you’ve been waiting for. Learn more.

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