What is Cash Flow?

Cash flow is the flow of real money. It is when money comes in and when money comes out of your bank balance and/or wallet - not ‘invoice’ money but real hard cash money.

There’s a difference between making a sale and cash flow.

SALES does not always = CASH IN


Because you can make a sale and deliver the item (for example, selling a pineapple for $1) without receiving any money until later on.

At the point of this sale, you have $1 in ‘invoice’ money, but not real hard cash money.
With cash flow, you’ll see when that $1 comes it. With profit or loss (aka Statement of Comprehensive Income), you’ll see that $1 at the point when you’ve made the sale - without receiving the money.

Next: What is Accounting?

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