Skip to content

Glossary

Cash flow

The money actually moving in and out of a business, as opposed to the profit on paper.

Profit is an accounting opinion; cash flow is a fact. A business can be profitable on paper and still fail because customers pay in ninety days while suppliers demand thirty. Positive cash flow means more money arrived this month than left.

Most self-made wealth comes from owning things that throw off cash every month, then using that cash to buy more of them. It is a slower story than a startup exit, and a far more common one.

Related terms