Business glossary
Cash flow
The movement of money into and out of a business during a period.
Example
A business receives $5,000 from customers and pays $3,800 for payroll, rent and supplies during a month. Its net cash movement from these transactions is $1,200.
How it differs from related terms
Cash flow records money moving. Profit also reflects how revenue and expenses are recognized. Unpaid sales can contribute to accrual profit without adding cash, and a loan can add cash without being sales revenue.
Frequently asked questions
What is an example of cash flow?
A business receives $5,000 from customers and pays $3,800 for payroll, rent and supplies during a month. Its net cash movement from these transactions is $1,200.
How should cash flow be interpreted?
Cash flow records money moving. Profit also reflects how revenue and expenses are recognized. Unpaid sales can contribute to accrual profit without adding cash, and a loan can add cash without being sales revenue.