Why is my cash so thin when my EBITDA looks healthy?

I’m profitable on paper but under three months of runway and quietly panicking

Profit is an opinion, cash is a fact. Forecast cash 13 weeks out, not just profit. The gap is almost always work delivered but not invoiced, invoices on 30 days paid on 60, and tax money sitting in your account that isn’t yours. Bill earlier, shorten terms, and keep tax in a separate account.

The Long Answer

Profit and cash drift apart for predictable reasons, and an agency can be genuinely profitable and still a fortnight from a scary payroll. The GYDA Index found 55% of agencies with under three months of cash, many in the one-to-three-month bracket, even though most were posting decent EBITDA. Where does the money go? Into work you’ve delivered but not invoiced. Into invoices sent on 30 days that clients pay on 60. Into VAT and corporation tax that’s sitting in your current account looking like yours when it isn’t. Into dividends taken when the year looked good. The fix isn’t more profit, it’s a 13-week rolling cash forecast so you can see the squeeze before it arrives, plus the basics: bill earlier, bill in advance, shorten terms, and keep tax money in a separate account. Profit is an opinion; cash is a fact. Founders who sleep well run the cash forecast weekly.