Break-even point in cash

The sales level that keeps the bank balance flat. Different from profit break-even.

What it means

Cash break-even includes items that do not appear in profit — loan capital repayments, tax set aside, and capital spending — and excludes non-cash items like depreciation.

Why it matters

A business can be at profit break-even and losing cash every month, because loan repayments and tax are not costs in the profit and loss.

What it looks like in practice

Calculate both. Profit break-even for pricing decisions, cash break-even for survival.

What to watch out for

Forgetting the tax. Money set aside for VAT and corporation tax is not available, and treating it as working capital is the classic route to a crisis.

Where to get proper advice

Your accountant, who can produce most of these from data they already hold.