What is Cash Flow?
Cash flow is the movement of money into and out of a business over a period, which shows whether it has enough cash to pay its bills on time.
Updated
Meaning
English
Cash flow is the movement of money into and out of a business over a period, which shows whether it has enough cash to pay its bills on time.
Roman Urdu
Cash flow karobar me paise aane aur jaane ka hisaab hai, jo batata hai ke bill waqt par dene ke liye cash hai ya nahi.
Also called cash flow statement, paise ki aamad o raft.
Example
A wholesaler made a good profit in November but had to pay suppliers 1.8 million rupees in advance for winter stock while 1.1 million was stuck in udhaar. Profit was positive, but cash flow was negative.
How it works
Profit and cash are not the same. Profit is earned when a sale is made; cash arrives when the customer pays. Stock bought today, udhaar given to customers, credit from suppliers and loan repayments all move cash without changing profit. That is why a growing shop can run out of money.
Look at cash flow weekly: cash in from sales and khata collections, cash out to suppliers, salaries, rent and the owner. Plan ahead for seasonal peaks, such as buying for Eid or school season, when stock must be paid for weeks before it sells.
In Nafaa
The Nafaa P&L page has a cash in and cash out view, and Shop accounts shows money in and out of each account (cash, bank, card, JazzCash, Easypaisa), the real balances, what the shop owns and owes, and a ledger of every movement.
Related terms
- Working Capital
Working capital is the money tied up in running the business day to day: stock plus money owed by customers plus cash, minus what is owed to suppliers.
- Accounts Receivable
Accounts receivable is the money customers owe a business for goods or services already supplied on credit.
- Accounts Payable
Accounts payable is the money a business owes its suppliers for goods or services it has received but not yet paid for.
- Profit and Loss Statement (P&L)
A profit and loss statement is a report of sales, costs and expenses over a period that shows whether the business made a profit or a loss.