Cash Flow

Finance & Payments

Definition

The movement of money into and out of a business over time.

Explanation

Timing matters as much as amount: procurement affects cash flow through payment terms, order timing and inventory. Managing these smooths outflows and supports liquidity, a key reason payment terms are negotiated so hard.

Example

Staggering large orders across months smooths cash outflow rather than spiking it.

Related terms

Working Capital — The money tied up in day-to-day operations — broadly current assets (inventory, receivables) minus current liabilities (payables).
Payment Terms — The agreed conditions for when and how a buyer pays a supplier, such as 'net 30 days' from invoice date.
Days Payable Outstanding (DPO) — The average number of days a company takes to pay its suppliers.
Budget — A financial plan allocating expected spend across categories, departments or projects for a period.

Frequently Asked Questions

What is Cash Flow?

The movement of money into and out of a business over time. Timing matters as much as amount: procurement affects cash flow through payment terms, order timing and inventory. Managing these smooths outflows and supports liquidity, a key reason payment terms are negotiated so hard.

Can you give an example of Cash Flow?

Staggering large orders across months smooths cash outflow rather than spiking it.

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