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What is Cash Flow?

Cash flow is the movement of money in and out of a company.

Why Cash Flow Is Important

• Cash is the lifeblood of any business. Without cash, it's game over. 
• Cash flow trends can be the ultimate measure and indicator of success and/or failure of the company performance.
• The amount of cash a company has on hand can be the single factor that determines if a company will survive a recession. Cash reserves are always a good idea to ensure an economic hit won't cause irreparable damage to your company. 
• Knowing how much cash the company has on hand at any given time allows for better decision-making.

Types of Cash Flow

These are all sources and uses of cash in a business. 

• Cash Flows From Financing — Financing activities are events that generally involve changes in debt or the raising of capital.
• Cash Flows From Investing — Investing activities are generally using cash in the purchase of assets for the business. Examples would be equipment, buildings, land and short-term marketable securities.
• Cash Flows From Operating — Operating activities are events that are the core business operations. This includes cash generated from the products or services provided, accounts receivable, accounts payable, depreciation and inventory.
  
  All of the above uses of cash are recorded in what is called a cash flow statement. A cash flow statement lists the financial transactions of a company over time.

Forecasting Cash Flow

Cash flow forecasting is the process of estimating the inflows and outflows of cash within an organization over a period of time. By forecasting cash a company can avoid any unforeseen urgent cash need surprises. Start forecasting your cash flow with our cash tools.