Skip to main content
Accounting & finance

Cash flow

The timing and amount of cash entering and leaving the business through operating, investing, and financing activity.

See the practical contextExplore the glossary

Workflow quick check

  • Which inflows are contracted, probable, or uncertain?
  • What are the largest timing and concentration risks?
  • Which payments can be rescheduled without operational harm?
  • What action starts when cash drops below the threshold?

Meaning in day-to-day work

What does it mean in practice?

Cash flow tracks when money actually enters and leaves the business. Profit and cash are related but not identical: a profitable sale may remain unpaid, while inventory, payroll, debt, and tax can require cash before revenue is collected.

Practical example

A company records strong monthly revenue but offers customers 60-day terms while suppliers and payroll are paid within 15 days. The income statement can show profit while the cash forecast shows a short-term funding gap.

Core formula

Closing cash = Opening cash + Cash inflows − Cash outflows

From start to close

How does the workflow operate?

1

Start with reconciled bank and cash balances.

2

Forecast customer receipts using due dates, behavior, and collection status.

3

Forecast supplier, payroll, tax, debt, capital, and other payments.

4

Model timing and best/base/worst scenarios rather than only monthly totals.

5

Compare forecast with actual cash and update assumptions and actions.

Recommended controls

What protects workflow quality?

  • Forecast lines linked to source schedules or named assumptions
  • Separate committed, probable, and uncertain cash flows
  • Regular bank reconciliation and unexplained variance review
  • Liquidity thresholds, escalation owners, and scenario triggers

Common mistakes

What should teams avoid?

  • Using invoiced revenue as if it were collected cash
  • Ignoring tax, debt, payroll, or capital-payment timing
  • Updating the forecast without preserving assumption changes

Build the concept map

Related glossary terms

Accounts receivableAccounts payableGeneral ledger

Platform context

Modules related to this term

Core Accounting

Review the related scope, workflow, and reports.

Financial Reporting

Review the related scope, workflow, and reports.

From definition to implementation

Use the term to design a clear workflow, not just a feature checklist.

Review the user guide, then test roles, data, exceptions, and reports in a guided demo.

Book a guided demoOpen the user guide