I met with three business owners last month.

All three had profitable businesses. All three were on the verge of closing their doors.

How? They fell into the deadly cash flow trap.

They confused financial performance with cash in the bank.

Here's the dangerous reality: You can be profitable on paper and still go bankrupt.

The third vital number every business owner must know cold—current cash balance—is often the most neglected until it's too late.

One client, a construction contractor, was showing healthy profit margins. Projects were coming in. Revenue looked good.

Then he couldn't make payroll.

His current cash balance had been dropping for months while he focused on revenue and profits. He never saw the crisis coming.

The problem? A 90-day gap between completing work and getting paid, combined with upfront material costs.

Every new project temporarily drained more cash than it generated.

This trap claims countless businesses yearly:

• Growing too fast without cash management
• Seasonal fluctuations creating temporary shortfalls
• Inventory buildups that consume cash
• Tax obligations that weren't properly planned for

The solution isn't complex, but it requires discipline:

• Know your current cash balance daily
• Create a rolling 13-week cash flow forecast
• Understand the timing of cash in vs. cash out
• Negotiate better payment terms with vendors
• Accelerate collections from customers

Remember: Profit is a number. Cash is reality.

A business with mediocre profits and strong cash flow management will outlast a highly profitable company that can't pay its bills.

Don't become another "successful" bankruptcy statistic.