Money
Cash Flow
The net amount of cash and cash-equivalents being transferred into and out of a business.
Why It Matters
A business can be profitable on paper but still go bankrupt if it runs out of cash. Cash flow is the oxygen of your business—it dictates whether you can pay bills, invest in growth, or survive a slow month.
Real-World Example
If you make a $10,000 sale today but the client pays in 60 days, your profit is $10,000, but your cash flow right now is zero. If rent is due tomorrow, you have a cash flow problem.
Inspiring Quotes
"Money isn't the most important thing in life, but it's reasonably close to oxygen on the 'gotta have it' scale."
How to Apply It This Week
- 1Review your bank balances weekly, not just monthly.
- 2Shorten the time it takes to get paid by clients (e.g., require deposits).
- 3Negotiate longer payment terms with your vendors.
- 4Keep a cash buffer of 3-6 months of operating expenses.
Common Misconceptions
People confuse cash flow with profit. Profit is revenue minus expenses. Cash flow is the actual timing of when that money moves in and out of your bank account.