CFO Series: Beyond the Numbers | Part 2 of 8
Georgina
Cash flow isn't the same as profit
One of the biggest misconceptions in business?
Thinking that making a profit means you'll always have money in the bank. The reality is, you can be profitable on paper and still feel the pressure of cash flow.
Why can a profitable business still run short of cash?
Because profit and cash move on different timelines. A few common reasons:
- Customers haven't paid their invoices yet.
- Tax or super payments are due.
- Stock has been purchased.
- Large expenses land before income arrives.
A timely one: Payday Super
From 1 July 2026, under Payday Super, super must be received into the employee's super fund within 7 business days of each payday, rather than paid quarterly. That changes the rhythm of cash going out. If your cash flow planning was built around quarterly super payments, it's worth a fresh look.
Profit vs cash flow at a glance
|
Profit |
Cash flow |
|
Money earned |
Money available |
|
An accounting result |
Movement in your bank balance |
|
Can look healthy |
Can still be under pressure |
Profit tells you how you've performed. Cash flow tells you whether you can keep moving.
Why cash flow forecasting matters
Understanding when money is coming in and when it's going out gives you the confidence to plan ahead, make informed decisions and avoid unnecessary surprises.
A small tip: check your aged receivables (who owes you, and for how long) every week, not just at month end. Slow-paying customers are one of the most common reasons we see good businesses feel cash-strapped.
How our CFOs help with cash flow management
At Square Penny, our CFOs help businesses look beyond the profit and loss statement. We help you understand your cash flow, forecast what's ahead and put strategies in place so your business is better prepared to have the cash it needs, when it needs it.
A profitable business is important. A business with healthy cash flow is sustainable.
Quick answers
Can a business be profitable and still have cash flow problems?
Yes, and it's more common than you'd think. Profit is recorded when you earn it, but cash only arrives when you're paid. If customers pay slowly or big bills fall due first, you can be profitable and still short on cash.
What is a cash flow forecast?
It's a projection of the cash coming in and going out of your business over the coming weeks or months, so you can see pressure points before you hit them.
Want a clearer picture of your cash flow? Talk to the Square Penny team on 1300 472 412 or visit squarepenny.com.au.