What is cashflow?

Definition of cashflow

Cashflow is money coming into, and going out of, your business. It can refer to physical cash in your hand, or cash in your business’s bank account(s). Cashflow is usually measured over a period of time, such as each month, or each quarter.

'Positive cashflow', 'healthy cashflow', or 'net cash inflow', means that your business has received more cash than it’s spent. This is usually a good sign, particularly if your business hasn’t received any money from borrowings as it means you are earning more than you’re spending.

'Negative cashflow', or 'net cash outflow', means that your business has spent more cash than it’s received. This isn’t usually a good sign, as it means your business is spending more than it’s earning.

Predict your cashflow future with FreeAgent

FreeAgent automatically builds a near-term cashflow forecast for your business based on the data in your account, including invoices, bills, salary payments and upcoming tax liabilities.

As well as forecasting how your finances might fare over the next 90 days, the Cashflow feature alerts you if it looks like your balance might drop below zero, allowing you to plan ahead and take early action if needed.