Profitable businesses still run out of cash when receivables stretch too far past payables, which is why timing matters as much as the headline margin.
A P&L tells you whether a sale was profitable. It says nothing about when the cash from that sale actually arrives, or when the cash to fund it had to go out. That gap — the working capital cycle — is where healthy-looking businesses quietly run into trouble.
The businesses that manage this well track receivables ageing and payables timing with the same seriousness they track revenue. A customer who pays in 90 days instead of the agreed 30 isn't a minor administrative issue; over enough customers, it's a liquidity problem wearing a profit-and-loss disguise.
The fix usually isn't complicated: tighter payment terms, earlier follow-up on ageing receivables, and a cash flow forecast that looks 8–12 weeks ahead rather than reacting to the bank balance in real time.