Bookkeeping

Cash flow

Cash flow is the cash a business receives and pays during a period. It includes customer payments, vendor payments, payroll, loans, taxes and owner draws.

Reviewed November 3, 2026

Why it matters

A profitable business can run out of cash if customers pay late or inventory uses cash. The cash flow statement shows the timing the profit and loss does not.

Example

A business reports $50,000 of net income but collects only $30,000 from customers and pays a $40,000 inventory bill. Cash falls even though the profit is positive.

Related terms

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Sources

Checked November 3, 2026. Public pages and tax rules change; confirm them before relying on them.

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