There is a dangerous hallucination in business called "Accrual Accounting." In this world, the moment you send an invoice for $10,000, your Profit & Loss statement says you made $10,000. You feel rich. You might even decide to buy a new laptop or hire a freelancer based on that profit.

But in the real world (Cash Accounting), you have $0. This gap between "Paper Profit" and "Cash in Bank" is where businesses die.

The Float Trap

The time between doing the work and getting the cash is called the "Float."

• You pay your employees every 2 weeks.

• You pay your rent on the 1st.

• But your client pays you in 45 days.

You are effectively acting as a bank, lending money to your client interest-free while you cover the costs.

How to Bridge the Gap

1. Stop Celebrating Invoices: Do not ring the sales bell when the contract is signed. Ring it when the wire transfer hits.

2. Shorten the Terms: If you are small, you cannot afford to be a bank. Push back on "Net 60" terms. Ask for "Net 15" or "Due on Receipt."

3. Track "DSO" (Days Sales Outstanding): This metric tells you the average number of days it takes you to get paid. If this number is creeping up, your cash flow is suffocating, even if your profit looks great.