Why a profitable business can still feel financially constrained.
Profit describes economic performance over a period. Cash flow describes when money actually enters and leaves the business.
Timing differences in receivables, inventory, debt, and major purchases can make the two measures move very differently. Profitable growth can still create a substantial demand for cash.
A rolling cash forecast, paired with accurate financial statements, helps owners see both business performance and the capacity to meet upcoming commitments.
This article provides general educational information and is not tax, legal, investment, or accounting advice for a specific situation.