Why Do Profitable Service Businesses Still Struggle With Cash Flow?
Many businesses look healthy on paper but still feel tight on cash.
Have you ever experienced a month that was profitable, but cash flow was still a challenge?
Forum Discussion
Yes! In 2025, we generated $1.3M in revenue with $146,835 in net income (profitable on paper). In 2024, we made $97,659 in net income (profitable again).
I learned this the hard way, but profit doesn't equal cash.
Payroll timing vs. receivables timing- We pay technicians weekly. Clients may pay days (or weeks) later. In a labor-heavy business, payroll is our largest expense (over $615K in 2025). If collections lag even slightly, cash gets tight fast.
Growth eats cash- Scaling requires front-loading expenses such as hiring before revenue is fully ramped, marketing spend (over $50K in 2025). We can be profitable but strained during high-growth months.
Debt and financing costs- In 2025, Jobber payment fees alone were $37K (my heart hurt seeing that!)
Owner distributions & taxes- Profit doesn’t stay in the business automatically. If you’re an S-Corp, tax obligations and distributions can drain liquidity even in profitable periods.
Snow days- We’ve had snow days with zero revenue, but fixed costs keep running.