Cash gap

Training 995 minutescash gap

You are 34 and run a small print shop: business cards, flyers, packaging for local stores. Orders keep growing, and so does profit on paper. Yet the bank account is somehow empty.

Training goal: Learn to see cash, not just profit

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Situation

1. A store chain orders $12,000 of packaging. Paper and ink cost $6,000 upfront, and your helper earns $2,000 for the month of work. The client pays 60 days after delivery. You have $2,500 in the bank.

Take it as offered: $4,000 profit
Take it, but ask for a 50% advance
Turn it down: big orders are too risky

2. Month result: $10,000 revenue, $2,000 profit. The bank shows $300. Clients owe you $6,000, and $3,000 of paper sits in stock, bought ahead.

Pay yourself the $2,000 profit, you earned it
Take a loan, the business is profitable
Map week by week when cash comes in and goes out

3. The paper supplier offers 10% off a six-month supply: $9,000 instead of $10,000. You have $3,000, and clients pay late.

Buy the supply on a loan at 2% a month
Keep buying monthly at the normal price
Buy the stock and delay your helper's pay

4. The store chain delays its $6,000 payment by another month. It brings 40% of your revenue. A bank loan costs 3% a month.

Offer 2% off for payment within 10 days
Stay quiet so you do not spoil the relationship
Send a written reminder, take new orders after payment

5. The season is over, and you have $8,000. Fixed costs: $1,200 rent, $2,000 wages, $800 other. A new $7,000 printer would pay back in about 10 months.

Buy the printer now, growth comes first
Pay yourself a $5,000 bonus
Keep $8,000 as a reserve, buy the printer from next profits

What you will learn

Profit on paper and cash in the bank live apart: find where your money is frozen.
Advances, short payment terms and early-payment discounts close the gap cheaper than a loan.
A reserve of 2-3 months of fixed costs comes before growth and bulk buying.

Your real-life step

This week list who owes you money and when they pay, then compare it with the dates of your own bills.

Questions and answers

What is a cash gap?

It is a moment when bills are due now and client money arrives later. A business can be profitable and still have no cash in the bank.

Why is there profit but no cash?

Profit counts a sale when work is delivered, while cash arrives when the client pays. The difference sits in unpaid invoices, stock and bulk purchases.

How much cash reserve does a small business need?

A common guide is 2-3 months of fixed costs. If clients pay late or revenue is seasonal, keep a larger reserve.

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Numbers are illustrative. A game, not financial advice.