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What Is Positive Cash Flow?
Adam Lean
Mar. 25, 2025 • 5 min read
Mar. 25, 2025 • 5 min read
The Key to Preventing Business Failure and Driving Growth
Most businesses fail. According to the U.S. Bureau of Labor Statistics, half of all businesses won’t make it to their fifth anniversary, and eight out of ten won’t survive to their tenth.
As a CFO Advisor, your job is to prevent your clients from becoming part of these statistics. Your role is to help business owners build growing and successful businesses. The good news? There’s one primary way to do both: ensuring they generate positive cash flow on a regular basis.
In this article, we’ll break down what positive cash flow is and how you can help your clients achieve it consistently.
As a CFO Advisor, your job is to prevent your clients from becoming part of these statistics. Your role is to help business owners build growing and successful businesses. The good news? There’s one primary way to do both: ensuring they generate positive cash flow on a regular basis.
In this article, we’ll break down what positive cash flow is and how you can help your clients achieve it consistently.
Watch the Full Breakdown
Watch the Full Breakdown
Prefer to watch the full video instead? Check it out below:
Why Positive Cash Flow is the Foundation of Business Success
The beauty of this concept lies in its simplicity: a business that generates positive cash flow will not fail and will have the ability to grow.
But what exactly is positive cash flow, and how do you help clients achieve it on a regular basis?
Let’s break it down.
But what exactly is positive cash flow, and how do you help clients achieve it on a regular basis?
Let’s break it down.
Your Role as a CFO Advisor: Guiding, Not Doing
Your job as a CFO Advisor is to guide business owners, not do the work for them. This is what differentiates a CFO Advisor from a fractional CFO.
To be a highly effective CFO Advisor, you need a unique skill set:
If you master these qualities, you’ll be far more valuable than someone who simply understands financial tactics.
- A fractional CFO takes on the role of a part-time financial leader within the business. The business owner expects them to produce financial results. This is extremely difficult, especially on a part-time basis.
- A CFO Advisor, on the other hand, serves as a guide, helping the business owner understand and implement financial strategies that lead to success.
To be a highly effective CFO Advisor, you need a unique skill set:
- The ability to influence business owners to take action, even though you don’t control them.
- A deep sense of empathy, because business owners need a trusted advisor.
- The heart of a teacher, guiding them step by step in a way they understand.
If you master these qualities, you’ll be far more valuable than someone who simply understands financial tactics.
What is Cash Flow?
Many business owners have heard the term cash flow, but few truly understand it.
Cash flow is simply the amount of cash left in the bank at the end of a given period—whether that’s a day, a month, or a year.
If instead, the business only had $5,000 in the bank, it would have a negative cash flow of $5,000.
Cash flow is simply the amount of cash left in the bank at the end of a given period—whether that’s a day, a month, or a year.
- If a business has more cash at the end of the period than it started with, it has positive cash flow.
- If a business has less cash than it started with, it has negative cash flow.
Example of Cash Flow in Action
Let’s say a business ended last month with $10,000 in the bank. By the end of this month, the balance is $15,000. This means the business has a positive cash flow of $5,000.If instead, the business only had $5,000 in the bank, it would have a negative cash flow of $5,000.
Helping Clients Generate Positive Cash Flow
Your job as a CFO Advisor is to guide your clients to generate positive cash flow on a regular basis. This means that after all expenses and owner distributions are covered, the business still has cash left over.
Example: Cooper’s Doggy Day Care
Cooper’s Doggy Day Care ended last month with $10,000 in the bank. During this month, the business had:
At the end of the month, the business has $11,000 in the bank. Since this is higher than the previous month, Cooper’s Doggy Day Care had positive cash flow of $1,000.Why Positive Cash Flow is Crucial
Once a business generates positive cash flow, the owner has options:
In contrast, businesses with negative cash flow struggle to survive, let alone grow.
Example: Cooper’s Doggy Day Care
Cooper’s Doggy Day Care ended last month with $10,000 in the bank. During this month, the business had:
- $20,000 in customer payments
- $5,000 paid toward a credit card
- $10,000 in payroll and accounts payable
- $2,000 on a bank loan
- $2,000 in owner distributions
At the end of the month, the business has $11,000 in the bank. Since this is higher than the previous month, Cooper’s Doggy Day Care had positive cash flow of $1,000.
Why Positive Cash Flow is Crucial
Once a business generates positive cash flow, the owner has options:
- Keep cash in the bank for financial stability.
- Transfer cash into a savings account.
- Pay off more debt.
- Invest in inventory, equipment, or supplies.
- Hire additional staff.
- Increase marketing efforts.
- Distribute more income to themselves.
In contrast, businesses with negative cash flow struggle to survive, let alone grow.
Cash Flow is the Key to Growth
What does it take to grow a business? Expansion, hiring, inventory, marketing—all of these require cash.
And the best way for a business to always have the cash they need is to have a positive cash flow.
As a CFO Advisor, it’s your responsibility to ensure that your clients don’t just experience positive cash flow once or twice, but that they generate consistent positive cash flow over time.
And the best way for a business to always have the cash they need is to have a positive cash flow.
As a CFO Advisor, it’s your responsibility to ensure that your clients don’t just experience positive cash flow once or twice, but that they generate consistent positive cash flow over time.
Positive Cash Flow is Like Losing Weight
Much like weight loss, cash flow will fluctuate:
However, over time, the overall trend must be positive. Just like sustainable weight loss happens over months and years, consistent positive cash flow leads to a financially healthy business.
- Some months will have negative cash flow.
- Some months will have positive cash flow.
However, over time, the overall trend must be positive. Just like sustainable weight loss happens over months and years, consistent positive cash flow leads to a financially healthy business.
Why Most Businesses Fail Without a CFO Advisor
Most business owners are not financial experts. They don’t have the knowledge to consistently generate positive cash flow on their own.
To succeed, business owners need one of two things:
This is why CFO Advisors are so valuable. Your job is to provide step-by-step guidance to ensure your clients avoid failure and build profitable, growing businesses.
To succeed, business owners need one of two things:
- They must develop strong financial knowledge themselves.
- They need a trusted guide—someone who helps them understand how to manage cash flow and build a successful business.
This is why CFO Advisors are so valuable. Your job is to provide step-by-step guidance to ensure your clients avoid failure and build profitable, growing businesses.
The Demand for CFO Advisory Services is Skyrocketing
If you become highly skilled at helping businesses generate positive cash flow on a regular basis, you will be in high demand.
Business owners want their businesses to succeed—but more importantly, they need them to succeed.
If you can provide a clear roadmap to financial success, clients will pay a premium for your expertise.
Business owners want their businesses to succeed—but more importantly, they need them to succeed.
If you can provide a clear roadmap to financial success, clients will pay a premium for your expertise.
Take the Next Step
Option #1: Check out our full breakdown in our advice video.
Option #2: If you want to learn how to become a highly successful CFO Advisor, explore all of our CFO Training for Accountants, CPAs, Bookkeepers, and Tax Professionals by checking out our CFO Training.
Option #3: Join an upcoming Right-Fit call to meet with an Enrollment Advisor to get a behind-the-scenes tour of our done-with-you mentorship program where we'll give you a turnkey system to start offering CFO Advisory services. Click to reserve your spot.
Option #2: If you want to learn how to become a highly successful CFO Advisor, explore all of our CFO Training for Accountants, CPAs, Bookkeepers, and Tax Professionals by checking out our CFO Training.
Option #3: Join an upcoming Right-Fit call to meet with an Enrollment Advisor to get a behind-the-scenes tour of our done-with-you mentorship program where we'll give you a turnkey system to start offering CFO Advisory services. Click to reserve your spot.
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