The Startup Ideas Podcast
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“Your P&L is a liar”
What It Means
P&L statements show accrual accounting that doesn't reflect actual cash timing, which can be misleading for survival decisions
Why It Matters
Many profitable-looking companies die from cash flow problems because P&L doesn't show when money actually moves
When It's True
For businesses with timing mismatches between revenue recognition and cash collection, especially B2B SaaS with quarterly payments
When It's Risky
When used to dismiss the importance of P&L for investor communications and long-term trend analysis
How to Apply
Build 13-week cash flow system alongside P&L tracking
Use cash flow for survival decisions, P&L for growth analysis
Reconcile differences when cash and accrual diverge >20%
Example Scenario
“SaaS company shows $500K revenue on P&L from signed annual contract, but only receives $125K quarterly payments, making them cash-poor despite appearing profitable”