Full Definition
Cash flow refers to the net amount of cash moving in and out of a business during a specific period. Positive cash flow means more money is coming in than going out, while negative cash flow (common in startups) means the company is spending more than it earns.
Types of Cash Flow
- Operating Cash Flow: Cash from core business operations
- Investing Cash Flow: Cash used for investments (equipment, acquisitions)
- Financing Cash Flow: Cash from fundraising, loans, or equity issuance
Cash Flow vs Revenue vs Profit
A company can be profitable on paper (accrual accounting) but still have negative cash flow if customers pay on extended terms. Startups must manage cash flow carefully because running out of cash — not lack of profit — is what kills most startups.
Real-World Example
A SaaS company with $500K monthly revenue but $400K in expenses has $100K positive monthly operating cash flow.
Related Terms
The rate at which a startup spends its cash reserves, typically measured monthly.
The amount of time a startup can operate before running out of cash, given its current burn rate.
The total income generated by a company from its business activities before any expenses are deducted.
The direct revenues and costs associated with a single unit of a business model (typically per customer).
The ongoing costs of running a business, including salaries, rent, marketing, and administrative costs.
Investor Outreach Template Pack
Get our proven email templates, pitch frameworks, and investor research guides — used by 1,000+ founders.
- Cold email templates that get 40%+ open rates
- Follow-up sequence frameworks
- Investor research checklist