You did it. You had a great sales month. The revenue numbers look fantastic, you’re delivering for your clients, and by all accounts, your business is growing. So you go to look at your bank account and you’re hit with a familiar, sinking feeling…
Where did all the money go?
If you’ve ever felt like you’re running on a financial hamster wheel—constantly bringing money in, only to watch it disappear just as fast—you are not alone. It’s one of the most common frustrations for entrepreneurs. This gap between the sales you make and the cash you have on hand is often caused by silent leaks in your financial boat.
These cash flow killers operate in the background, quietly siphoning money out of your business. But once you learn to spot them, you can plug the leaks for good. Here are five of the most common culprits.
Killer #1: Subscription Creep
Remember that cool new marketing software you signed up for with a free trial? What about the three different project management tools your team tested out last year? Each one costs just $20, $50, or $100 a month—a small drop in the bucket. But together, those drops can quickly become a flood. This slow accumulation of recurring, often forgotten, monthly charges is called “subscription creep.”
- How to Spot It: Print out your last three months of bank and credit card statements. Go through them line-by-line with a highlighter and mark every single recurring charge. You will almost certainly be surprised by what you find.
- How to Fix It: Be ruthless. For every subscription, ask: “Are we actively using this right now to generate revenue or operate the business?” If the answer is no, consider canceling it immediately. You can always sign up again later if you truly need it.
Killer #2: Sky-High Accounts Receivable
Accounts Receivable is the money that your customers owe you for services you’ve already delivered. When this number gets too high, it means you are effectively giving your clients a free, zero-interest loan. Your business is acting like a bank, and it’s draining your cash reserves.
- How to Spot It: Look at a list of your outstanding invoices. How many are past their due date? Do you have clients who consistently pay 30, 60, or even 90 days late? If you don’t have an easy way to see this, it’s a major red flag that this killer is at work.
- How to Fix It: Implement a clear collections process. Send automated reminder emails before, on, and after the invoice due date. For new projects, consider requiring an upfront deposit to cover initial costs. The goal is to shrink the time between when you do the work and when you get paid for it.
Killer #3: Ignoring Your True Profit Margins
Let’s say you sell a product for $100. It feels like you’re making $100. But what if the product itself cost you $45, the shipping was $10, and the transaction fees were $5? You actually only made $40. Not knowing your true profit margin on each product or service is a recipe for “profitless prosperity”—you’re busy, but you’re not actually making much money.
- How to Spot It: This requires looking at your Cost of Goods Sold (COGS)—the direct costs tied to what you sell. If you don’t know your gross profit margin (Revenue – COGS = Gross Profit), you can’t know which of your offerings are truly profitable and which are just keeping you busy.
- How to Fix It: For each major product or service, calculate its true cost. Once you know your most and least profitable offerings, you can make strategic decisions to focus your sales and marketing efforts on what actually makes you money.
Killer #4: Bloated Overhead Expenses
Overhead expenses are the costs you have to pay just to keep the lights on—rent, utilities, insurance, and salaries that aren’t directly tied to a product or service. While necessary, these costs can easily become inflated, slowly eating away at the profit you make from sales.
- How to Spot It: The key is categorization. If all your expenses are lumped into one giant “Business Expenses” category, it’s impossible to see where the bloat is. Are you overspending on office supplies? Is your software bill creeping up (see Killer #1)?
- How to Fix It: Set up a simple system to categorize every single expense. When you see exactly where your money is going each month—$X on rent, $Y on software, $Z on marketing—you empower yourself to ask tough questions and find areas where you can trim costs without hurting the business.
Killer #5: The Co-mingling Trap
This is perhaps the most dangerous killer of all. You’re at a store and need to buy something for the business, but you just use your personal debit card because it’s easier. Or you pay a personal bill from your business account because it has more cash in it at the moment. This mixing of personal and business funds, known as co-mingling, makes it impossible to get a clear picture of your finances.
- How to Spot It: Look at your business bank statement. Are there charges for groceries, movie tickets, or personal utility bills? Look at your personal statement. Are there charges for software, suppliers, or other business expenses? If the answer to either is yes, this trap has sprung.
- How to Fix It: The solution is absolute. Open a separate business checking account and get a dedicated business debit (or credit) card. All business income goes into that account, and all business expenses come out of it. This separation is the single most important step you can take for financial clarity.
From Chaos to Clarity
If one or more of these cash flow killers hit close to home, don’t panic. The simple act of identifying them is the most important step.
The solution to all of these problems begins with one thing: a clear and accurate system for tracking the money that moves through your business. When you have that clarity, you move from feeling reactive and stressed to feeling proactive and in control. You stop asking “Where did the money go?” and start telling it exactly where to go.
