Financial Reporting

Cash Flow

The net movement of money in and out of your business. Positive cash flow means more money coming in than going out.

Formula

Cash Flow = Cash Inflows - Cash Outflows

What is Cash Flow?

Cash flow tracks the actual movement of money into and out of your business over a period. A business can be profitable on paper but still fail if it runs out of cash.

Cash Flow vs. Profit

Profit is an accounting concept. Cash flow is actual money in the bank. You might show a profit but have negative cash flow if customers pay late, or if you're pre-buying inventory.

Cash Flow Challenges in E-Commerce

Paying suppliers 30-60 days before selling inventory
Marketplace payment delays (14-30 days)
Seasonal inventory buildup requiring upfront capital
Ad spend requiring immediate payment while revenue is delayed

Example

Cash in: $80,000 (customer payments). Cash out: $70,000 (suppliers, ads, rent). Net cash flow: +$10,000.

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