What is cash flow?
Cash flow is the movement of actual money in and out of your accounts.
Not what you invoiced. Not what you are owed. What landed, and what left.
Profit can be recorded the moment work is done. Cash arrives when somebody pays, and those can be sixty days apart.
How can a profitable business fail?
Easily, and it is the most common way a good business dies.
You take a large job. You pay for materials, wages and fuel in week one. The customer pays in week nine. On paper the job is profitable. In week five you cannot make payroll.
The profit was real. It just was not there yet. Nobody accepts a profitable-on-paper explanation from a man who cannot pay his crew on Friday.
Where does it usually go wrong?
Three places.
Growth, because growth consumes cash before it produces it. Doubling the work doubles the outlay months before it doubles the receipts.
Terms, because a man who pays in seven days and gets paid in forty-five is financing his customers for free.
And tax, which is not your money and sits in the account looking exactly like your money until the day it does not.
How do you get a grip on it?
Write down what is leaving in the next thirty days and when, then what is arriving and when, using realistic dates rather than the dates on the invoice.
Do it weekly. Ten minutes.
Most cash problems are visible three weeks out to anyone who is looking, and invisible to everyone who is not.