Accounting

Cash flow

Definition

Cash flow is the movement of money into and out of a business over a period. Positive cash flow means more cash came in than went out. Invoicing directly drives cash flow: how quickly you invoice, your payment terms, and how reliably clients pay determine when revenue actually becomes usable cash.

Cash flow in practice

A profitable business can still fail from poor cash flow if invoices are paid slowly while expenses are due immediately. Deposits, shorter terms, recurring billing, and prompt follow-up all smooth cash flow.

Frequently Asked Questions

How does invoicing affect cash flow?

Every day between finishing work and receiving payment is a day your cash is tied up. Invoicing immediately, using shorter terms, and automating reminders shorten that gap.

Related terms

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