Cash Flow
Ron explains it all in just 60-seconds.
So what is cash flow, really?
Cash flow is the actual movement of money in and out of your business. It’s not the same as profit. You can have plenty of sales on paper but still be broke if the actual funds haven’t hit your account yet.
Cash flow tracks when money arrives and when it leaves - through sales, expenses, payroll, bills, loan payments, and everything in between. Positive cash flow means you have more coming in than going out. Negative cash flow means the opposite and if it lasts too long, you’ve got a problem.
Managing cash flow is about timing, not just totals. It’s one of the most important (and most ignored) numbers in any small business.
You don’t go out of business because of bad ideas… You go out of business because you ran out of cash.
How people actually use it in a sentence...
“Rosa’s spreadsheet said she was profitable — but her cash flow said, ‘not this week, girl.’”
Did you know...
According to U.S. Bank, 82% of small business failures are linked to poor cash flow management. Many were technically profitable but they just ran out of money before payday.
Turns out, vendors don’t accept “we’re waiting on a few checks” as payment.
Want the textbook definition? Check out Cash Flow on Investopedia.com