Is business cash flow the problem? 

Four experts determine whether cash flow is the problem or a symptom

In our line of work, we hear about the problems business owners are facing every day. Often, owners cite cash flow as a significant problem and the biggest barrier to investing in business improvements. But is cash flow really the problem? 

We asked four experts to weigh in on the following statement:

“True or false: Lack of cash flow is a symptom, not a problem.”

Their responses may surprise you. 

Meet the experts

Expert 1 Kristopher Hart Kris is a Senior Business Analyst with over 20 years of experience driving operational excellence and strategic growth across diverse industries.

Expert 2 Don DeHaven Don is a seasoned business analyst and finance management executive committed to excellence in financial reporting.

Expert 3 Kai Hungerford Kai is an experienced business consultant with expertise in operations management and fraud detection, and a passion for helping small businesses thrive.

Expert 4 Andrew Pfeiffer  Andrew is a strategic operations consultant and business leader with over 20 years of experience helping businesses grow, scale, and operate with clarity and consistency.

Expert 1: Kristopher Hart

Kris says…TRUE: Lack of cash flow is a symptom, not a problem.

Cash flow is the smoke, not the fire. If you only chase cash, the fire keeps burning. Focusing on growth and the next sale to solve a past issue doesn’t fix the underlying problem. This type of owner behavior is a symptom of the cancer underneath.

Cash flow doesn’t fail on its own. It fails because pricing, margins, or discipline failed first.

Cash flow problems rarely originate with cash itself. They are almost always the result of broken fundamentals or a weak foundation: pricing that doesn’t reflect real costs, eroding margins, slow or undisciplined billing, excess labor, or a lack of measurable controls.

Cash flow feels like the problem because it’s the pain point. Payroll bounces. Vendors call. Stress spikes. But plugging the gap with loans or short-term fixes only masks the real issue and delays the correction.

Fix pricing, margins, billing discipline, and operational accountability, and cash flow typically fixes itself. Cash flow is the warning light, not the engine failure.

Expert 2: Don DeHaven

Don says…TRUE: Lack of cash flow is a symptom, not a problem.

Such a true statement. Weak cash flow results from owners failing to recognize the effects of running their business without proper controls and policies. 

Here are four problems that may present on the surface as weak cash flow:

• Customer receivables: When a business lacks control or a policy for collecting from customers, poor flow results. When you allow this, you invite customers to use your business as a bank. If this is you, your business needs tighter controls and policies to keep customers honest about payments due.
• Inventory is too high: Just because you have a great opportunity to purchase inventory does not mean it is the right thing to do. If your cash is tied up in inventory, it’s not available for other business needs. As a business owner, keeping inventory under control is your responsibility. Review your lead times to ensure you have what you need when you need it and sell off obsolete or overstock items.
• Business debt: Debt can be both a tool and a trap. While financing is often necessary for capital purchases, problems arise when the business does not generate enough cash flow to service that debt. This risk rarely shows up on the income statement. Many businesses, particularly toward year-end, take on new debt to capture Section 179 tax deductions without fully considering the long-term impact on cash flow and financial stability.
• Margins are too tight: Business owners are often terrified to raise their pricing to match all the expense increases they have incurred. For example, when your employees want raises, will you consider raising your prices to cover the difference, or will your business eat this additional cost? How about those raw materials – when those prices increase, do you increase yours? You can see this impact directly in the Income Statement in the Gross and Net Margins of the business.

Expert 3: Kai Hungerford

Kai says…TRUE: Lack of cash flow is a symptom, not a problem.

Lack of cash flow is the symptom. The problem? Almost always, it’s a lack of proper accounts receivable or accounts payable controls and processes.

Business owners, while quick to pay their payables, tend to be passive in collections. Accounts receivable needs to be proactive in meeting specific weekly goals to collect the money owed to the business. This can be done by calling customers to validate that the invoice was received approximately 3 days post-invoicing, then following up around the 30-day mark to validate when the payment should be received. Post 30 days, collection calls need to be made. 

Expert 4: Andrew Pfeiffer 

Andrew says…TRUE: Lack of cash flow is a symptom, not a problem.

It rarely breaks on its own. It is almost always the downstream result of decisions, behaviors, and systems that were already failing long before cash became tight.

In my experience, cash flow issues usually trace back to one or more root causes:

1. Margin erosion: When pricing is inaccurate, labor efficiency is low, or overhead is not properly absorbed, the business can appear busy while quietly bleeding cash. Revenue masks the problem, but margins tell the truth.
2. Poor execution and follow-through: Long-running jobs, uncaptured change orders, invoicing delays, and weak collections all create timing gaps. Cash flow suffers not because the work was not sold, but because it was not executed and billed with discipline.
3. Lack of financial visibility: Many owners do not truly understand how their P&L performance impacts the balance sheet. Decisions get made without understanding working capital requirements, debt pressure, or the cash consequences of growth. The result is surprise and stress when cash becomes tight.
4. Misaligned expectations and accountability: When roles are unclear, standards are not defined, and performance is not measured, financial leakage becomes normal. Cash flow problems are simply the scoreboard reflecting that lack of alignment.

Treating cash flow as the problem leads to short-term fixes, like delaying payments, tapping credit lines, or cutting expenses reactively. Treating it as a symptom forces better questions: Where are we losing margin? Where are we inefficient? Where are we out of alignment? What decisions are we avoiding?

When those root causes are addressed, the flow of cash improves naturally and sustainably.

Conclusion

The experts have spoken. Cash flow is a symptom of an underlying business problem, whether due to margin erosion, lack of urgency in accounts receivable, lack of visibility, or other business fundamentals. If you’re experiencing cash flow issues, we’re here to help. Get in touch today.