# Case: profitable on paper, short of cash in August > A year of profit and cash side by side: find what causes the cash flow problems, size the August gap and write a plan to fix it without panic borrowing. - Course: [Finance for Product People: From Unit Economics to Business Cases](https://productovi.com/courses/finance-for-product.md) - Module: Where did the money go? - Lesson 12/32, ~40 min - Source: https://productovi.com/courses/finance-for-product/august-cash-case ## Profitable on paper **Alex Tutor:** You're still on Klasna's product team, and Leo and Hanna see August very differently. **Leo:** The board will see 744 thousand UAH of operating profit for the year. Hanna says we'll be below zero on 31 August. One of you must be wrong. **Hanna:** We're both right, and that's the problem. Here's the whole year: nine months of actuals and my forecast for June to August. **Dataset (CSV):** [Klasna's cash and profit, September 2025 – August 2026](https://productovi.com/datasets/finance-for-product/august-cash-case/klasna-cash-2025-2026.csv) One row per month, UAH. September–May are actual; June–August are Hanna's forecast made on 1 June. All costs are paid in the month they're incurred; the provider's 2.5% fee is taken when families pay. Cash on 1 September 2025: 600,000. - `operating_profit_uah`: Operating profit from the P&L - `lessons_delivered_uah`: What families paid for the lessons that took place that month - `families_paid_uah`: Cash in: what families paid for packages that month - `payment_fees_paid_uah`: Cash out: the provider's 2.5% of what families paid (tutor_payouts_uah … marketing_uah: the other cash costs) - `equipment_uah`: Cash out: equipment (the laptops in August) - `net_cash_flow_uah`: Cash in minus all cash out - `closing_cash_uah`: Cash at the end of the month **Alex Tutor:** Put two numbers side by side: the year's operating profit and the year's change in cash. When a profitable business has cash flow problems, the distance between them, the [cash gap](/glossary/fin-cash-gap), is what we have to explain. > **Exercise:** Use the dataset. By how much does Klasna's **operating profit for the year exceed its change in cash** for the year (September 2025 – August 2026, with the forecast)? ## What causes cash flow problems: where the profit went **Sofia:** Nearly 1.5 million apart. The laptops are 432,000 of it. The rest must be the prepayments. **Alex Tutor:** Add up families_paid minus lessons_delivered for the year: −1,086,661. Over the year families used 1.09 million more lessons than they paid for. After the provider's fee, that's 1,059,494 of cash the P&L counted as revenue but the bank received a year earlier. **Hanna:** Last August we ran an early-bird sale, so many September lessons were paid before this year began. This August there's no early-bird in the plan. **Sofia:** So part of the 600,000 we started the year with was already spoken for: it paid for September lessons. **Alex Tutor:** Exactly. Money that arrives before the year starts gets spent inside it, without ever showing up as this year's payments. **Alex Tutor:** Check that idea with a quick true-or-false. > **Exercise:** **True or false:** Klasna started the year on 1 September 2025 with 600,000 UAH in the bank. Last August it ran an early-bird sale, so families had already paid for many September lessons. All 600,000 was therefore free cash for the new year. > **Exercise:** Klasna's year (September 2025 – August 2026, with the forecast) shows 744,174.72 UAH of operating profit, yet cash falls by 747,319.75: a gap of 1,491,494.47. Over the year families paid for 1,086,661 UAH less in lessons than they used, and Klasna bought 432,000 of laptops. Which pair of causes explains the gap? ## Seasonal cash flow: the summer **Alex Tutor:** Now the shape of the year. Cash peaks at 4,365,515.50 in April. Then from June to August operations lose 903,116, families use 2,665,130 more lessons than they pay for, and the laptops land. **Sofia:** So the spring cash was really the summer's lessons. We just held it for a few months. **Alex Tutor:** Measure that drop from the top of the year. > **Exercise:** Use the dataset. By how much does Klasna's month-end cash fall from its **highest point of the year** to the forecast for **31 August 2026**? **Hanna:** On 1 September I pay salaries before the September prepayments arrive. I want at least 500,000 in the bank on 31 August. > **Exercise:** Hanna’s forecast closes 31 August at −147,319.75 UAH. She wants at least 500,000 UAH in the bank on 31 August, because salaries are paid on 1 September before the new prepayments arrive. By how much must Klasna improve its August closing cash to get there? ## How to fix cash flow problems cheaper than a loan **Leo:** Then we borrow 650,000 for a couple of months. Problem solved? **Alex Tutor:** Maybe, but look at cheaper levers first, and we have three months to pull them. Timing: buy the laptops in September or lease them. Prepayments: open September sales in August. Spending: summer marketing is 540,000; keep only what brings September sign-ups. **Hanna:** And a small credit line arranged now, as a backup. Banks lend more willingly in June than in the last week of August. **Alex Tutor:** Two plans side by side. Which one would you take to the board? > **Exercise:** It is 1 June. Klasna’s forecast ends August at −147,319.75 UAH, and Hanna wants at least 500,000 on 31 August. Which plan is better? **Leo:** And if July turns out worse than your forecast? **Hanna:** Then the credit line is already in place, and we find out in mid-July, not on 30 August. That's the point of a forecast. > **Exercise:** The forecast closes 31 August at −147,319.75 UAH; it includes 432,000 of laptops in August and 540,000 of marketing over June–August. Which of these plans would, **on their own**, bring the 31 August balance to at least 500,000 UAH? Assume nothing else changes; families’ prepayments reach the bank minus the provider’s 2.5%. **Alex Tutor:** One more combination Hanna sketched for the memo. > **Exercise:** The forecast ends August at −147,319.75 UAH. It includes 432,000 of laptops in August and 540,000 of marketing over June–August. If Klasna moves the laptops to September and cuts summer marketing by **40%**, nothing else changing, what is the 31 August balance? ## Explaining it to Leo **Leo:** Before the plan, I need to understand it well enough to say it to the board myself. Where did our 744 thousand go? **Alex Tutor:** A short answer first. Then the memo. **Sofia:** Two causes, two numbers. > **Exercise:** The year earns 744,174.72 UAH of operating profit, yet cash falls by 747,319.75, from 600,000 to −147,319.75. Leo asks: "Where did our 744 thousand go?" Answer in 2–4 sentences with the two causes and their numbers. ## The memo **Leo:** Now the memo for the board: why we're short, how short, and what we do about it, starting this week. **Hanna:** Numbers for every lever, please. "Cut costs" isn't a plan. **Alex Tutor:** And say what you'll watch in July, so nobody discovers the gap on 30 August. > **Exercise:** Write the memo for the board: profitable for the year, short of cash in August. Why, how short, and what we do about it. > **Key ideas** > > - A profitable year can end short of cash: Klasna earns 744,174.72 UAH, yet its cash falls by 747,319.75 to −147,319.75 on 31 August. > - The gap of 1,491,494.47 has two causes: families used 1,086,661 more lessons than they paid for over the year (1,059,494 of cash after fees), and 432,000 of laptops. > - In a prepaid seasonal business, spring cash is summer's lessons. The peak (April, 4.37 million) is not spare money. > - Size the gap against what you need, not against zero: 647,319.75 to keep a 500,000 buffer. > - Pull cheap levers early (timing of capex, earlier prepayments, summer spending) and arrange a credit line as a backup while the bank looks healthy. **Alex Tutor:** That's the module: profit tells you whether the business works, cash tells you whether it survives the calendar. You need both on the same page. - Previous lesson: [Burn rate, cash runway and staying alive](https://productovi.com/courses/finance-for-product/burn-and-runway.md) - Next lesson: [Working capital: who pays whom first](https://productovi.com/courses/finance-for-product/working-capital.md) --- Productovi Learning. Free, no sign-up needed to read.