Why can changes in working capital affect cash flow even for profitable companies?

[HardissonHard]

It’s kind of wild — I used to think that if a business was profitable, everything was fine financially. But a few months ago, I helped a friend with his small business. Sales were up, profit looked good on paper, but he still couldn’t cover basic expenses. Turns out, most of the cash was tied up in inventory and unpaid invoices. So he was profitable, but broke. I get the idea a little, but can someone explain how exactly this works? How does profit not equal cash?

[BillShiphr]

I ran into the same issue helping my cousin with his retail store. He had solid earnings, but couldn’t make payroll one month because his customers hadn’t paid yet. What helped me understand was this great breakdown of change in working capital (https://eboostpartners.com/change-in-working-capital/). It explains how shifts in receivables, payables, or inventory can drain or free up cash, even if you’re technically profitable.

[GooseWashington]

Honestly, it kind of changed the way I think about money in general. Even personally — like, you might have a good paycheck, but if everything hits at once (bills, rent, etc.), you’re suddenly short. Timing really is everything when it comes to cash flow.