What is cash flow?

Definition of cash flow

Cash flow is money coming into, and going out of, your business. It can refer to physical cash in your hand, or cash in your business’s bank account(s). Cash flow is usually measured over a period of time, such as each month, or each quarter.

'Positive cash flow', 'healthy cash flow', or 'net cash inflow', means that your business has received more cash than it’s spent. This is usually a good sign, particularly if your business hasn’t received any money from borrowings as it means you are earning more than you’re spending.

'Negative cash flow', or 'net cash outflow', means that your business has spent more cash than it’s received. This isn’t usually a good sign, as it means your business is spending more than it’s earning.

Keeping track of your cash flow

Tracking cash flow is a top priority for any business. FreeAgent's cash flow view gives a monthly snapshot of the money coming in and going out, so you know at a glance if your business is making or burning cash.

Got questions?

Bookkeeping and tax tips

We are committed to keeping your information safe. Read our Privacy Policy to find out more.

Are you an accountant or bookkeeper?

Find out more about FreeAgent for your practice.