Cash Flow

Definition

Cash flow is the net amount of cash moving into and out of a business during a specific period. Positive cash flow means more money is coming in than going out. Negative cash flow means the opposite.

There are three types:

• Operating cash flow: Cash generated from normal business operations — selling products, paying employees, collecting from customers.
• Investing cash flow: Cash spent on or received from long-term assets — equipment purchases, software investments.
• Financing cash flow: Cash from or to investors and lenders — raising capital, repaying loans, paying dividends.

Cash Flow vs. Profit

This is the distinction that trips up most business owners. Your P&L might show a $50K profit this month, but your bank account dropped by $20K. How? Because profit is an accounting concept that includes non-cash items and timing differences. A $100K invoice sent today counts as revenue — but the cash might not arrive for 60 days.

82% of businesses that fail cite cash flow mismanagement as the primary cause. Not lack of revenue. Not bad products. Cash flow.

How CentSight Helps

CentSight provides a real-time cash flow dashboard that tracks actual cash movement — not accounting abstractions. It forecasts upcoming gaps based on known payables and receivables, alerts you to unusual outflows, and answers questions like “When is our next cash crunch based on current commitments?”