Cash Flow vs. Profit — Understanding the Difference and Why It Matters

Episode Summary In this episode of The Legal CFO, Ryan Kimler, founder of Net Profit CFO, breaks down one of the most misunderstood financial concepts for law firm owners—the difference between profit and cash flow. Many firms show a profit on paper but still struggle to pay their bills. Ryan explains why this happens, the hidden financial activities that affect cash flow, and how law firms can implement smarter billing, debt management, and cash reserve strategies to maintain financial health. He also shares practical tools, seasonal planning insights, and one small change every firm can make today to strengthen cash flow management. Key Timestamps 00:45 – Why profitable law firms still face cash flow problems 02:10 – How debt impacts cash flow even with positive profits 05:00 – Three major categories that affect cash flow: assets, debt, and equity 07:30 – Why owner distributions and taxes create cash flow gaps 09:15 – The biggest cause of cash flow struggles for law firms 11:00 – How billing terms and collections protect cash flow 13:15 – Building cash reserves and setting a safety net for your firm 15:30 – Using forecasting tools to monitor and project cash flow 17:00 – The impact of seasonal trends on cash flow planning 18:00 – One small change law firms can make today to improve cash flow About the Show: The Legal CFO is a podcast designed to give law firm owners the financial clarity they need to grow confidently. Featuring Net Profit CFO founder Ryan Kimler, each episode delivers practical strategies for smarter operations, improved profitability, and peace of mind — turning law firm finances from a headache into a growth engine.