Cash Flow

Cash flow is the movement of money in and out of a business and is a direct measure of its ability to operate, meet obligations, and remain financially stable. While profits indicate performance on paper, cash flow determines whether a business can function day to day. Cash flow becomes critical during periods of growth, economic uncertainty, or tight credit, when timing gaps between income and expenses can quickly create pressure—even for profitable businesses.

Businesses generate strong cash flow through timely collections, sound cost control, and effective management of receivables, payables, and inventory. Owners should actively monitor cash positions, forecast future needs, and align spending and borrowing with cash-generating capacity. Warning signs include constant use of overdrafts for routine expenses, slow-paying customers, excess inventory, delayed statutory payments, and expansion that drains cash faster than it is produced. Identifying and addressing these early helps protect the long-term health of the business.

Cash flow projection template.xlsx