Introduction – Why Many Profitable Companies Still Go Bankrupt
Many entrepreneurs believe that if the company is profitable, the business is healthy.
In reality, many companies go bankrupt even when they are profitable on paper.
The main reason is simple: lack of cash flow.
Profit shows what the company earns in theory, based on invoices issued and expenses recorded. Cash flow, however, shows how much money actually exists in the company's account.
For example:
- You issue an invoice for €10,000
- The client pays it in 60 days
- Meanwhile, you need to pay: salaries, VAT, rent, suppliers
The company may have accounting profit but no money in the account to pay current obligations.
That's why one of the most important things an entrepreneur must learn is:
👉 How to understand and control the company's cash flow.
In this guide, you will learn:
- What cash flow means in a business
- How to calculate operational cash flow
- How to determine if your company is financially healthy
- How to prevent financial bottlenecks
1. What is Cash Flow in a Company
Cash flow means the flow of money entering and leaving the company over a given period of time.
In short:
Cash Flow = money received – money paid
If receipts are greater than payments, the company has positive cash flow.
If payments are greater than receipts, the company has negative cash flow.
A negative cash flow in the short term is not necessarily a problem. But if the situation continues for several months, the company can quickly run into financial difficulties.
2. The 3 Types of Cash Flow in a Company
To properly understand the financial health of a company, cash flow is divided into three main categories.
a) Operational Cash Flow
This is the most important type of cash flow.
It represents the money generated from the company's core business activity:
- Sales of products or services
- Collections from clients
- Payments to suppliers
- Salaries
- Rent
- Utilities
- Taxes
If a business cannot generate positive operational cash flow, in the long run the business is not sustainable.
b) Investment Cash Flow
This type of cash flow refers to investments the company makes to grow.
Examples:
- Purchasing equipment
- Acquiring a company vehicle
- Developing software
- Investing in new equipment
These expenses may generate negative cash flow in the short term, but their purpose is to increase revenue in the long term.
c) Financing Cash Flow
Financing cash flow represents money coming from financing or distributed to shareholders.
Examples:
- Bank loans
- Partner investments
- Dividends paid
- Loan repayments
This type of cash flow shows how the company is financed and how money is distributed to owners.
3. Why Cash Flow is So Important
An entrepreneur who monitors cash flow can:
- Prevent financial bottlenecks
- Plan investments
- Avoid excessive debt
- Make better decisions for company growth
That's why, in large companies, cash flow is one of the most important financial indicators.
4. Calculate Your Company's Cash Flow
Want to quickly see if your company has healthy cash flow? Use our free calculator:
5. Useful Resources for Entrepreneurs
If you want to better understand your company's finances, here are some essential guides:
- 📊 What Taxes Does a Self-Employed Person Pay in Belgium (2026) – find out exactly how much you pay in social contributions, income tax and VAT
- 💰 Dividend Tax in Belgium 2026 – how to protect your profits as an entrepreneur
- 📝 How to Build a Business Plan on One Page – structure your business quickly
- 🚀 How to Become Self-Employed in Belgium (2026) – complete step-by-step guide
Don't forget to calculate your taxes too: