Case: profitable on paper, short of cash in August

Leo will show the board 744,174.72 UAH of operating profit for the year. Hanna says the bank will be below zero on 31 August. Both are right.

Put two numbers side by side for September 2025 to August 2026 (with the summer forecast):

• operating profit: the sum of the monthly profits, 744,174.72;
• change in cash: the sum of the monthly net cash flows, −747,319.75 (from 600,000 on 1 September to −147,319.75 on 31 August).

The distance between them is the cash gap we have to explain:

744,174.72 − (−747,319.75) = 1,491,494.47 UAH.

Mind the sign: subtracting a negative change adds. A profitable year whose cash falls has a gap larger than its profit.

This is the first step of any "profitable but short of cash" diagnosis: measure the gap precisely, then find the causes that add up to it. If the causes you name do not sum to the gap, something is still missing.

A balance at the start of a year is not automatically free money. Ask what it is made of.

Klasna began September 2025 with 600,000 UAH. Last August it ran an early-bird sale: families paid in August for lessons they would take in September. That money sits in the opening 600,000, but Klasna already owes it in lessons.

Then, during the year:

• the September lessons happen and enter this year's revenue and costs;
• the tutors are paid this year;
• but the families' money for those lessons never appears as this year's payments, because it arrived before 1 September.

So part of the opening cash is spent inside the year without any matching cash coming in. It is one reason families used 1,086,661 UAH more lessons than they paid for over the year.

And this August there is no early-bird in the plan, so next year starts without that head start. When you read an opening balance, separate cash Klasna owns from cash it still owes as deferred revenue.

A gap between profit and cash can only come from things that move cash and profit at different times. Costs paid in the month they occur, such as marketing, coordinators or salaries, are in both and explain nothing. So are loss-making months: they are already inside the profit.

Klasna's year has two causes:

1. Prepayments reversing. Over the year families used 1,086,661 UAH more lessons than they paid for. The P&L counted those lessons as revenue; their cash had arrived earlier, partly before the year began, through last August's early-bird sale. After the provider's fee: 0.975 × 1,086,661 = 1,059,494.48.
2. Equipment. The laptops, 432,000, left the bank in August; this year's P&L carries none of it, because depreciation starts in September.

1,059,494.48 + 432,000 = 1,491,494.48, the gap (1,491,494.47 after rounding of monthly fees).

The test of a good diagnosis: the named causes add up to the measured gap, to the hryvnia or close to it.

In a prepaid seasonal business, the shape of the cash curve follows the buying season, not the profit.

Klasna's month-end cash:

• it climbs through winter and spring as families buy exam packages;
• it peaks on 30 April at 4,365,515.50 UAH;
• it falls through May and the summer as families use those packages;
• the forecast for 31 August is −147,319.75.

From the peak to the end of August cash falls by 4,365,515.50 − (−147,319.75) = 4,512,835.25 UAH in four months.

From June to August alone: operations lose 903,116, families use 2,665,130 more lessons than they pay for, and the laptops land in August.

The lesson: the spring peak was never spare money. It was the summer's lessons, paid in advance and held for a few months. Treating the April balance as a cushion for new spending, as Leo did on 1 June, is how a profitable school ends the summer below zero. Read the peak together with the deferred revenue that sits behind it.

A cash problem should be measured against the balance the company needs, not against zero.

Hanna's forecast closes 31 August at −147,319.75 UAH. Reaching zero would take 147,319.75. But on 1 September Klasna pays salaries before September's prepayments arrive, so Hanna wants a buffer of at least 500,000.

The real gap:

500,000 − (−147,319.75) = 647,319.75 UAH.

Why a buffer at all? Three reasons:

• timing inside the month: big payments can come before the receipts that cover them;
• forecast error: July could turn out worse than planned;
• room to act: a balance of exactly zero leaves no space for anything unexpected.

So a plan that "gets us to zero" is not a plan. Every lever in the memo should be sized against 647,319.75, and the memo should say why the buffer is 500,000.

A forecast is valuable because it arrives early. On 1 June Klasna knows that August will end at −147,319.75 UAH against a 500,000 target. Three months is enough to pull cheaper levers:

• timing of capex: buy the laptops in September, or lease them;
• earlier prepayments: open September sales in August;
• summer spending: marketing is 540,000 over June–August; keep only what brings September sign-ups.

A loan still has a place, as a backup. Hanna wants a small credit line arranged now: banks lend more willingly in June, when the balance is healthy, than in the last week of August, when it is not. If July turns out worse than forecast, the line is already there, and Klasna finds out in mid-July, not on 30 August.

Compare that with "wait and borrow 650,000 if needed": it wastes the months in which cheap levers work, pays interest for a gap that could have been closed, and asks for money at the worst possible moment.

"Cut costs" is not a plan. Each lever needs a number, measured against the target: 500,000 UAH on 31 August, from a forecast of −147,319.75.

Two details matter. Prepayments arrive minus the provider's 2.5%, so 700,000 of sales is 682,500 of cash. And a lever only counts if it moves cash before the date that matters: a September price rise may be a good idea, but it does nothing for August.

Combine levers until the total clears the target, and prefer the ones that cost the least in lost value.

Most real plans combine levers. Add their effects on the date that matters and compare the result with the target.

Start: the forecast ends 31 August at −147,319.75 UAH; target 500,000, so 647,319.75 to close.

Combination:

1. Move the laptops to September: +432,000 → 284,680.25.
2. Cut summer marketing by 40%: 40% × 540,000 = +216,000 → 500,680.25.

That clears the target by only 680.25 UAH, which is effectively no margin at all. A plan this tight needs a backup: a credit line arranged now, or a third lever such as an August early-bird, so that a weaker July does not undo it.

Two checks for any combination:

• Independence: make sure levers do not overlap. Cutting marketing that would have brought the early-bird sign-ups weakens both.
• Cost in value: cutting 216,000 of marketing may cost September sign-ups; moving laptops costs a month of older equipment. Name the trade-off next to each number.