Profit is usually the headline number that business owners focus on. And yes, profit matters. But if there’s one thing we see time and time again with small and growing businesses, it’s this:
A profitable business can still fail if it runs out of cash.
Cash flow is often the real make-or-break factor. In this blog, we’ll explain why cash flow matters so much, the common mistakes SMEs make, and how tools like Syft can help you stay in control.
Profit vs Cash Flow: What’s the Difference?
Let’s start with the basics.
They are not the same thing.
You can show a healthy profit on paper, but still struggle to pay your bills if:
Cash flow is about timing, not just totals.
Why Cash Flow Is Often More Important Day to Day
Cash flow keeps the lights on. It pays:
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Wages
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Suppliers
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Rent
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Tax
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You
Without cash in the bank, profit figures don’t help much in the real world.
For most SMEs, especially in the early years, cash flow is what determines whether the business survives long enough to become consistently profitable.
That’s why accountants often say: “Profit is theory. Cash is reality.”
Common Cash Flow Mistakes We See in SMEs
Here are some of the most common issues that trip businesses up, even successful ones:
1. Late Invoicing (or Not Chasing Payment)
If invoices go out late, cash comes in late. And if no one is chasing overdue invoices, cash flow suffers quickly.
2. Relying on “Expected” Money
Counting money that should arrive, but hasn’t yet, can lead to overspending and nasty surprises.
3. Growing Too Fast
Growth often needs cash upfront: more stock, more staff, more tools. Growth without planning can actually create cash flow pressure.
4. Forgetting About Tax
VAT and Corporation Tax don’t feel urgent… until they suddenly are. Not setting money aside can cause serious stress later.
5. Only Looking at the Bank Balance
Your bank balance tells you where you are today, not where you’re heading.
Why Cash Flow Visibility Is Key
One of the biggest problems for business owners is not having a clear picture of what’s coming next.
This is where forecasting and reporting tools can make a huge difference.
How Tools Like Syft Can Help
Syft is a reporting and forecasting tool that works alongside your accounting software to give you:
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Clear cash flow forecasts
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Easy-to-understand visuals (not scary spreadsheets)
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Early warnings if cash flow is tightening
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Better insight for decision-making
Instead of reacting to problems, you can see them coming and act early.
For many business owners, that clarity alone reduces a huge amount of stress.
So… Is Cash Flow More Important Than Profit?
In the short term? Yes. In the long term? You need both.
Profit builds value and sustainability. Cash flow keeps your business alive while you get there.
The strongest businesses understand the relationship between the two and manage both proactively.
How Jennison Accounting Can Help
We don’t just look at historic numbers, we help you understand:
Whether that’s improving invoicing processes, planning for tax, or using tools like Syft to gain clarity, we’re here to help you feel in control, not overwhelmed.
If cash flow feels confusing, stressful, or like a constant guessing game, you’re not alone. And you don’t have to figure it out on your own either.