What cash flow means for a small business
Cash flow tracks money actually received and paid during a period; it is not the same as sales or profit.
Topic guide: Cash flow control
Direct answer
Cash flow tracks money actually received and paid during a period; it is not the same as sales or profit.
Key takeaways
- Cash flow includes money actually received and paid; a credit sale is not a cash inflow until collection.
- Opening cash plus receipts minus actual payments should reconcile to the closing cash position.
- If opening cash is 2 million sum, actual receipts are 5 million, and payments are 4 million, closing cash is 3 million. An uncollected sale is excluded.
pDaftar capabilities
- pDaftar provides reports and statistics based on recorded business activity.
Definition and boundary
Cash flow includes money actually received and paid; a credit sale is not a cash inflow until collection.
Inflows include cash received and money credited to the bank, not a customer promise or uncollected credit sale. Likewise, an outflow occurs when money is paid rather than when an order is placed.
Required record elements
Opening cash plus receipts minus actual payments should reconcile to the closing cash position.
Cash flow belongs to a defined period, so a payment one day earlier or later falls elsewhere. Reconcile bank and till separately before combining their movements for a clearer result.
A simple cash-flow example
If opening cash is 2 million sum, actual receipts are 5 million, and payments are 4 million, closing cash is 3 million. An uncollected sale is excluded.
Limitations
- Cash flow explains movements in available money, but it does not establish profitability or future solvency on its own.
Sources
- pDaftar pricing — pDaftar
- pDaftar features — pDaftar
- IAS 7 Statement of Cash Flows — IFRS Foundation