Profit is calculated over a period of time, but bills, salaries and supplier payments are due on specific dates — a business can show a profit for the month and still be unable to pay rent because a big invoice hasn't been paid yet. Tracking cash in and out separately from overall profit is one of the simplest ways small business owners catch this risk early.
Source: Corporate Finance Institute
Frequently Asked Questions
What's the difference between profit and cash flow?
Profit is revenue minus expenses over a period; cash flow is the actual movement of money in and out of your bank account — a business can be profitable and still run short on cash if payments are delayed.
How often should a small business review its cash flow?
Many small business advisors recommend reviewing cash flow at least monthly, and weekly during tight periods, rather than waiting for annual financial statements.
Is there a simple way to track this without an accountant?
The Income & Expense Tracker – South African Edition gives South African small businesses a straightforward way to track money in and out, so cash flow issues show up before they become a crisis.