Cash Flow

Cash flow means the movement of money in and out of a person, business, or organization. In simple terms, cash flow shows whether more money is coming in or going out. Cash flow is important because it helps show whether someone can pay bills, cover expenses, invest, or handle emergencies. Positive cash flow means more money is coming in than going out, while negative cash flow means more money is going out than coming in. For example, if a business receives $10,000 from customers in a month and pays $7,000 in expenses, it has positive cash flow of $3,000. Cash flow is not the same as profit. A business can be profitable on paper but still have cash flow problems if money does not arrive when it is needed.