Appearing profitable is not the same as having money in the cash register to pay. The manufacturer can make sales and issue the invoice today; However, collection from the customer arrives after 60 or 90 days. Meanwhile, raw material, salary, energy, tax, loan and subcontractor payments do not wait. As a result, although profit is shown in the income statement, the bank account and cash register may be insufficient.
Profit occurs in the account, cash moves according to date
The profit impact of a sale and the date the customer pays the money may differ. Likewise, the purchase of machinery, loan principal payment or stock increase may not be reflected in the expense statement at the same time and in the same amount while removing money from the cash register.
The sale was made
Invoice and income record has been created; The customer has not paid yet.
Production financed
Material, labor, energy and subcontractor expenses were covered by the company.
Inventory and receivables grew
The money is not in the safe; waiting for raw materials, semi-finished products, products or customer purchases.
Collection arrived later
The sale turned into usable cash only when the customer paid.
Why Does Cash Decrease Even Though There Is Profit?
Customer maturity is longer than supplier maturity
If you pay for the raw material in 30 days and collect it from the customer in 90 days, you finance the 60 days in between with company capital or credit.
Money is waiting in inventory and semi‑finished goods
Unsold product, excess raw materials and incomplete production are assets in accounting; but cannot be used to pay salaries or suppliers.
Invoice issued but not collected
Even if a sales and profit record is made, the delinquent, delayed or disputed customer receivables will not increase the bank balance.
Investment payment left the safe
Investment in machinery, molds or facilities can immediately reduce cash. On the other hand, the expense effect of the investment is often spread over periods through depreciation.
Growth increased business capital
Order more; It means more materials, production, inventory and receivables. As sales grow, financing needs may grow faster.
Loan principal and lump sum payments are approaching
Loan principal, tax, SSI, premium, rent or periodic purchase payments may create cash outflows on dates independent of sales profit.
There is a profit of 420 thousand TL; At the end of the month, cash decreased by 600 thousand TL
The following amounts are examples designed to illustrate the concept. It is not a tax or accounting practice recommendation.
Where does the cash conversion cycle problem appear?
Cash conversion cycle; It helps to understand how many days company money is tied up in the business, from the receipt of raw materials to the customer making payment. In manufacturing companies, raw material, semi-finished product and finished product waiting days affect the stock period together.
stock day
Representative time from purchasing the material, producing, and selling the product.
collection day
Average time from sale to customer payment.
Payment day
Average term until payment is made to the supplier.
cash return day
As a result of 52 + 68 − 30, the company finances its activity for approximately 90 days.
A long period of time alone does not prove that the business is poorly managed; sector, production period, season and customer structure should be taken into consideration. The real management question is why this period is prolonged and whether the resource to finance the growth of the company has been planned.
7 Questions to Find Out Where the Money Is Connected
How to Set Up a Weekly Cash Plan?
Monthly totals can hide the shortfall on payday. Each week's opening balance, expected collection, mandatory payment and closing balance should be tracked separately for at least an eight-week view. Uncertain collections should not be accepted as definite money inflows.
1. Opening cash
Separate blocked or unavailable amounts from bank and cash balances.
2. Dated collections
Instead of customer promises, consider maturity, past payment behavior and confirmation status.
3. Mandatory payments
Place wage, tax, SSI, loan, check, promissory note and critical supplier payments in history.
4. Planned expenditures
Separate inventory purchases, maintenance, investment and deferred expenses from mandatory payments.
5. Weekly balance
Predict the date of the deficit by closing each week's closing and opening the next week.
6. Three scenarios
Calculate expected, delayed collections and high payment scenarios separately.
Shows the financial table without separating it from production and stock
ERP alone will not solve the cash gap. However, it combines customer and supplier maturities, open orders, amount waiting in stock, semi-finished products in production, upcoming payments and realized collections in common data. Thus, instead of guessing after seeing the "no money" result, it can be investigated in what process and for how long the money remained.
Korgün's finance and cash‑flow solution KG Herme, supports tracking bank, collection, payment and term information together with production and commercial processes. To evaluate the management view analysis and reporting approach You can also review.
From Which Point Should You Start First?
The first step is not to look for a new loan, but to make it visible where and how long the cash remains tied up. If there are overdue receivables, inactive stock, premature purchasing, long production period and unplanned investment at the same time, the need for financing becomes permanent. Therefore, sales, production, inventory, purchasing and financial data should be evaluated together.
Frequently Asked Questions
Why does a profitable company experience payment difficulties?
Payments for raw materials, wages, taxes, loans and investments can be made without collecting sales. When inventory and customer receivables grow, available cash may decrease even if profits are made.
What is the difference between cash flow and income statement?
The income statement shows the income and expense result of the period. Cash flow tracks the date on which money enters the business and the date on which it leaves.
How is the cash conversion cycle calculated?
Add the average collection days to the average days in inventory, subtract the average supplier payment days. The result should be interpreted together with the sector and production structure.
What is the first thing to look for in a cash crunch?
Overdue receivables, upcoming mandatory payments, inactive stocks and the collection-payment balance of the next eight weeks should be examined together.
Resources and information
- Public Oversight Authority, TFRS 2026 Set, and IAS 7 Statement of Cash Flows: Official standard for evaluating cash flows in terms of operating, investing and financing activities.
- ACCA, Working Capital Management- Explanation of the cash‑flow cycle consisting of inventory, receivable and payable days.
Last source check: 1 August 2026. This content is for general information purposes only; It is not a substitute for business-specific accounting, tax, investment or financing consultancy. Evaluate your decisions with your financial advisor and financial advisor.
To make collection and payment dates visible weekly cash flow statement guide you can use the planning steps.
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