Why can a contractor be profitable on paper yet still run out of cash?

Giải thích

Accrual accounting books revenue when it is earned, but wages, suppliers and taxes must be paid in cash immediately, and money sitting in receivables, retention and work in progress is not available to spend. Double-recording revenue would be an error, not a reason. Depreciation is the opposite case: it reduces book profit without any cash leaving the bank. And retention is recorded as a receivable, an asset still owed, which is precisely why profit can look healthy while the bank balance does not.