Cash flow is money moving in and out of a business, separate from your bank balance. It covers payments to suppliers and workers. Sustainable cash flow is essential for operations and how investors value a company.
What is cash flow and why is this crucial? Cash flow is simply money, the coins, the notes that you spend with, that you buy with, that you have to pay your suppliers, your workers. It's just cash. So it is really the difference between cash coming into your business and cash leaving your business. That is cash flow. So it's not limited to your bank account balance. No, it's that flow of cash coming in, coming out, and you do want to ensure that at the end of the day you have sustainable cash flow. And why it is so important is that is what you need to spend your monies. That is what is going to be one of the key components in valuing your business as well.
