08/20/2026
A profitable business can still run out of cash!
It sounds contradictory, but it happens all the time.
A business can show a healthy profit and still struggle to make payroll, pay suppliers, cover loan payments, or meet tax obligations.
Why?
Because profit and cash flow are not the same thing.
Your cash may be tied up in receivables, inventory, equipment purchases, debt repayments, taxes, or growth that requires money today but will not generate cash until later.
That is why, from a CFO perspective, I would not stop at:
“Are we profitable?”
I would also ask:
- How quickly are customers paying us?
- What cash commitments are coming up over the next 30, 60 and 90 days?
- Is the business generating enough cash to support its growth?
- What happens if sales slow down or a major customer pays late?
Profit tells you how the business performed.
Cash flow tells you whether you can keep moving.
Before making your next big business decision, look beyond the bottom line.
Know your profit. Know your cash. You need both.
