Cash flow, explained simply

Cash flow is simply the movement of money in and out of your business over time. It's not the same as profit — and confusing the two is what catches most owners out.

Profit on paper, broke in the bank

You can be profitable and still run out of cash. If you've invoiced $20,000 but clients haven't paid yet, that profit can't pay this week's wages. Timing is everything.

How to keep it healthy

• Invoice promptly and follow up — the sooner you bill, the sooner you're paid.
• Agree on clear payment terms, and don't be shy about chasing overdue ones.
• Keep a small buffer — a few weeks of costs — for the quiet or unexpected times.
• Look ahead, not just back: a simple forecast shows tight months before they arrive.

You don't need complex tools — just a habit of watching the money coming in against the money going out, a little ahead of time.