Definition
Cash flow
Cash flow is the movement of money into and out of a business over time. Positive cash flow means more money is coming in than going out. Even profitable businesses can fail if cash flow is poor, so timely invoicing and collections are critical to staying solvent.
Cash flow tracks the timing of money, not just the total. A business can be profitable on paper yet still struggle if customers pay slowly while bills come due. Cash flow measures whether you actually have money on hand when you need it.
For service businesses, good cash flow comes from billing promptly, collecting on time, and reducing the gap between doing work and getting paid. Automating invoices and payment reminders keeps that cycle tight so the business stays financially healthy.
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