Cash Flow

How cash flow works

Cash received from customers, borrowing or asset sales is compared with payments such as suppliers, wages, tax and finance commitments. A forecast places those movements in the periods when payment is expected, not simply when income or expense is recognised.

Practical UK business example

A business invoices a customer in March but expects payment in May. Its March accounting income does not cover April payroll unless other cash is available.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

A cash-flow forecast helps identify the amount, timing and duration of a funding requirement and whether repayment is realistic.

Limitations and common misconceptions

Positive profit does not guarantee positive cash flow. A loan improves cash when drawn but creates future payment obligations; it is not trading income.

Discuss business borrowing or Explore invoice finance to discuss how the structure relates to your business.