Cash Flow Explained

Cash Flow

What is Cash Flow?

Cash flow refers to the movement of money in and out of a business. It tracks how much cash is coming in from sales or income sources, and how much is going out through operational, financing, or investing activities.

Explanation

Healthy cash flow is essential for sustaining day-to-day business operations. Without it, even profitable companies can struggle to meet immediate financial obligations. There are three main types of cash flow:

Operating Cash Flow: Generated from core business activities.
Investing Cash Flow: Linked to the purchase or sale of assets.
Financing Cash Flow: Results from loans, equity, or dividends.

Tracking cash flow provides insight into liquidity, profitability, and financial flexibility.

Practical Example of Cash Flow

A local bakery makes £50,000 in monthly sales and spends £35,000 on ingredients, wages, and rent. This gives them a net positive cash flow of £15,000.

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How Bizcap Can Help:

If your business faces irregular income or sudden expenses, Bizcap offers fast business loans from £5K to £750K. With approvals in as little as 3 hours, we help stabilise your cash flow so you can focus on growth.

Want to improve your business’s cash flow? Learn about cash flow finance options that can help you bridge shortfalls and keep your business running smoothly.

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