Explainer: cash flow vs. profit (and why businesses fail despite sales)

Many businesses make sales yet still run out of money. The reason is usually cash flow, not profit.

The difference:

• Profit is sales minus costs — a number on paper.
• Cash flow is the actual money moving in and out, and when.

You can be profitable but broke if customers pay late while your bills are due now. Practical habits:

• Track money in and out weekly.
• Keep a small cash buffer for slow periods.
• Invoice promptly and follow up politely on late payments.

How do you manage cash flow in a business with seasonal or irregular income?