Profitable businesses can still run out of cash because profit and cash are not the same thing: profit is an accounting measure based on when revenue is earned and expenses are recorded, while cash is the actual money in the bank. Growing businesses often spend cash upfront on inventory, staff, contractors, or delivering work long before customers pay, so growth itself can create a cash squeeze. Cash also gets trapped in unpaid invoices or unsold stock, while businesses usually have to pay wages, suppliers, tax, loan repayments, equipment costs, and owner drawings before income arrives.
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