← Glossary/Finance
Cash Flow
The actual money moving in and out of an account each month. Different from profit, and what bills get paid from.
Example
Your friend's print-on-demand shop has $500 of profit on paper for the month. But the customers who paid have not actually transferred yet, while the printer wants $200 today. The shop is profitable but has zero cash flow this week.
How it fits in
A household or business can be profitable on paper and still run out of cash if the timing is wrong. Cash flow is what is in the account today. Profit is what is left after costs over a period. Most early business failures are cash-flow problems, not profitability problems. The fix is usually getting paid faster and paying suppliers a little later.
Where this is taught
Related terms
When the money you earn from saving starts earning its own money on top.
Interest paid only on the original amount, never on the interest you have already earned.
Needs are the things that keep you safe and well. Wants make life nicer. Mixing them up is what empties most budgets.