FinanceBusiness TipsProfit

Cash Flow vs. Profit: Why Profitable Businesses Go Broke

Published on November 3, 2025

Profit is "Sales minus Expenses." Cash Flow is "Money In minus Money Out." They are not the same timing.

If you spend $50,000 on materials in January, but your client doesn't pay the $80,000 invoice until April, you have a $30,000 profit, but you might go bankrupt in February because you have $0 cash.

The Fix: Invoice Terms

Shorten your payment terms. Use "Net 15" instead of "Net 30." Ask for 50% upfront deposits on all large Quotes.

SmoothLedger provides free invoicing tools for professionals worldwide. Whether you are a freelancer in the UK, a contractor in the US, or a designer in Canada, our Invoice Generator templates are fully customizable to your currency and tax laws.