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You’re Profitable but Broke: 5 Financial Warning Signs Founders Miss
- Brett J. Federer, CPA
- Jul 21
- 4 min read
Updated: Aug 2
Revenue’s coming in. Your books look “fine.” But cash still feels tight — and you can’t quite explain why. Here are 5 subtle signs you’re running your business on guesswork, not clarity.
1. You’re Guessing Where Your Cash Really Went
Your books can be reconciled and technically “clean” — but still leave you guessing.
The problem isn’t bad bookkeeping. It’s that most founders don’t have a structured way to connect cash movement to what’s actually happening in the business.
That’s why cash feels unpredictable. You might see a higher bank balance, but not realize it’s because vendor payments were delayed. Or you might feel “tight on cash” without seeing that a big outflow was a one-time prepayment, not a burn issue.
When you can’t clearly answer “Where did the cash actually go this month, and how is that changing over time?”, you’re left making gut calls.
This is why I build a Cash Clarity Method™ for every client — not as extra reporting, but as cash infrastructure. It’s designed to:
Map cash movement by GL account, month by month, updated with your close
Tie book activity to actual cash flow shifts you can trust
Give you high-level graphs for quick context, with drilldowns when you need detail
By Month 4, cash stops feeling like a mystery. You can see exactly where it went — and explain it confidently.
2. You Delay Decisions Because the Numbers Feel Fuzzy
“Let’s wait until we’re more certain.” Sound familiar?
Hesitation creeps in when your numbers don’t feel reliable, even if revenue and expenses are recorded correctly. It shows up in subtle ways:
Hiring stalls because margins aren’t clear
Larger inventory orders get pushed because you’re not sure cash can handle it
You want to scale paid ads, but you can’t trust your Customer Acquisition Cost (CAC)
Even without forecasting, structured historical reporting fixes many decision delays. Once financials stop being a pile of data points and start being a decision-making tool, hesitation disappears. Priorities sharpen. Gut calls feel grounded.
3. Your Team Doesn’t Know What Numbers Matter
When you’re small, financial misalignment hides easier. As you scale, it gets expensive.
Here’s what it looks like in practice:
A marketing lead pushes ad spend to hit revenue goals — while ignoring that CAC is killing margins
A manager cuts “expensive” tools that were actually saving money elsewhere
Different departments make decisions based on their own assumptions because no one is looking at the same version of the truth
When your team fills in the blanks on their own, you end up paying for scattered decision-making.
That’s why I give clients one structured version of the truth — the same numbers every month and every quarter, built to be shared:
Monthly: Clean financial statements, ongoing updates to the Cash Clarity Method™ workbook, a monthly cash balance graph, and exception flags only when something material comes up
Quarterly: A one-page insights letter, nine key health metrics (4 set for consistency, 5 chosen by you), and four refreshed trend graphs
When everyone’s looking at the same clear baseline, chaotic meetings turn calm, and priorities finally line up.
4. You Rely on Your Gut More Than Your Reports
Good instincts get you here. Clean data keeps you here.
When your reports don’t give you clear answers, you naturally default to gut calls. That’s fine — until the numbers surprise you later.
The signs are subtle:
“Margins felt stronger than this last month — what changed?”
“Didn’t we just get paid $50k? Why does cash already feel tight?”
Those aren’t bad instincts — they’re instincts without support. You know something feels off, but you can’t trace it quickly enough to make confident calls.
That’s why I focus on building reporting that sharpens your intuition instead of replacing it. Clean cash movement, simple graphs that highlight trends, and quarterly insights give you the clarity to trust your gut — and act on it with confidence.
5. Every Investor Conversation Feels Like a Scramble
If preparing for an hour-long investor call still feels like pulling an all-nighter, you’re doing it the hard way.
Investors don’t just want numbers — they want a narrative. But you don’t need Board-ready decks or a total workflow overhaul to get there.
Strong internal reporting changes the conversation:
Your graphs explain what changed without extra slides
Your cash movement story makes sense without you scrambling to defend it
Your metrics stay consistent quarter after quarter — so they build trust naturally
I don’t take over departments or run your workflows. I build a financial infrastructure for the month-end close that makes you look prepared, even when you’re not trying to impress anyone. Clean, consistent, structured numbers do the heavy lifting — so you can walk in calm and walk out credible.
Final Word
Being “profitable but broke” isn’t about bad instincts or bad bookkeeping. It’s about running your business without the financial infrastructure to connect the dots.
The founders who scale smoothly aren’t guessing their cash position, stalling big decisions, or piecing together investor narratives last-minute. They’ve built controller-grade systems that explain where their money went — and give them the confidence to lead with clarity.
