It is possible for a contractor to show a net profit on the income statement yet still be unable to pay its bills. This situation is best explained by:

Explanation

Profit is an accrual result while bills are paid in cash, and money parked in receivables, retention and work in progress is earned but unavailable, so the bank can be empty while the income statement looks healthy. A licence error stops the contractor working; it does not create this pattern. Under-recovering overhead destroys profit, so the income statement would not show a profit at all. And too high a markup loses bids rather than cash.