Cash flow and profit are the same, right? Wrong. Your business can generate high profits and have poor, or no, cash flow. For example, your accountant says the business made a profit. The day-to-day reality is there’s no money for the payroll. Sound familiar? It sounds like a cash flow problem.


What is Cash Flow?

Cash flow is the movement of funds through your business. It is expressed by a simple formula: Cash inflows – cash outflows = cash flow

Cash Inflows

Cash inflows are the cash that comes into your business. For example, when a customer pays you for their purchase of your products or services.

Cash Outflows

Cash outflows are the cash covering monthly expenses—for example, rent, wages and salaries, purchase of raw ingredients to make products.

The difference between cash inflows and cash outflows is net cash flow, which is either positive or negative.

Positive Cash Flow

Positive cash flow is the goal. It means you get in more cash than you spend. You can pay your bills on time, and payroll is a breeze. Negative cash flow means you get in less cash than you spend. You dreed payroll each week, and bills are never paid on time.

A business generating consistent negative cash flow will run out of money and eventually close its doors. Lack of cash flow is widely cited as the primary reason small businesses fail.

Positive cash flow allows you to invest in tools to improve productivity and efficiency. Finally, you can upgrade your “paper-based system” to a dedicated, web-based accounting tool or inventory platform. Or you can get your business an updated order management system to streamline the ordering process.

Positive cash flow gives you expansion options. Maybe you want to set up new premises, buy new equipment, or hire more employees. When you’ve got cash on hand to purchase everything you need to run your business and you’re meeting your financial obligations, you can start looking to expand.


Positive cash flow is good for the soul. In addition to paying staff and suppliers, positive cash flow gives your business opportunities. How is your cash flow?

The TimeSmart team delivers powerful insights and guidance designed to help business owners of all sizes understand their numbers, create a strong plan for their future, and set the stage for organizational acceleration that helps them grow their business and boost their bottom line.

Are you ready to get started? So am I! Click the button below to schedule your discovery call and prepare to unlock a new approach to business with TimeSmart.