Positive cash flow means more money is arriving than leaving. Negative cash flow means the opposite. Cash flow and profit are not the same thing — this distinction trips up many UAE founders. A business can be profitable on paper (showing a net profit on its P&L) and simultaneously cash-flow negative if clients are paying slowly, large VAT payments are due, or inventory has been purchased in advance. In the UAE, poor cash flow — not lack of profit — is the leading cause of SME failure.
Watch out: When the FTA issues a VAT refund, it can take 20 business days or more to process. Plan your cash flow to accommodate this lag, particularly if you are export-heavy or have high input VAT.
See also: Cash Flow Forecast, Working Capital, Accounts Receivable (AR)
