What is Cash flow?

Cash flow (Definition)

Cash flow is the movement of money in and out of your business each month or over a given period, including cash and cash equivalents. Cash flow in, refers to all income into your business from clients or customers purchasing your goods or services directly from you. If they have an account with you the cashflow then comes in the form of accounts receivable. Any money earned from investments also contributes to the businesses cash flow. Cash flow out, is associated with any expenses related to the business such as rent, loan repayments, utilities, tax etc and any accounts payable. It is important to understand the cash flow in and out of your business as it is essential in assessing the overall financial performance as well as its flexibility and liquidity.