What is Cashflow?
A plain-English answer for business owners who are tired of nodding along like they already know.
The simple answer.
Cashflow is the movement of money into and out of your business.
Money comes in when customers pay you. Money goes out when you pay your team, your suppliers, your rent, your tax. Cashflow is the story of those two things happening - and whether the timing works out.
"Cashflow is not about how much money your business makes. It is about when."
That one word - when - is what most people miss. And it explains why a business can be doing well on paper and still struggle to pay its bills.
Why cashflow matters more than profit.
Profit is the number left over at the end of the year. Cashflow is what you have right now, today, to pay for things.
A business can be profitable and still run out of cash. It happens when sales are made but not yet paid for. When stock has been bought but not yet sold. When tax falls due on money earned months ago. When costs arrive before the sales that cover them do.
Profit tells you whether your business is working. Cashflow tells you whether it will survive.
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Every cashflow problem is a timing problem.
In every business, there are moments when cash leaves and moments when it arrives. The gap between those moments is where cashflow problems live.
The good news is that timing problems have specific causes. And specific causes have specific fixes. You don't need to become a financial expert. You just need to understand where your timing is breaking down.
Three questions worth asking yourself right now:
1. Is money leaving your business faster than it's coming in?
2. Are there amounts owed to you that haven't been paid yet?
3. Do you know when your next big payment obligation falls due?
If any of those made you uncomfortable, your cashflow needs attention. The good news: once you know where the timing is breaking down, it's fixable.
Find out which area is yours. Run the two-minute diagnostic.
Run Diagnostic
Who put this together.
Astute Mode is a Christchurch-based outsourced finance team. We work inside the day-to-day finances of NZ small businesses, and cashflow is the thing we talk about more than anything else.
Our director, Prue McStay (CPA) has spent years working inside the finances of NZ small businesses. Not advising from a distance, actually getting into the numbers with business owners and helping them understand what is happening and why.
We built this diagnostic because most business owners know something is wrong with their cashflow long before they know what it is. This gives you a specific answer quickly.
That is why we built the diagnostic. Take two minutes and see what comes up.
Find out exactly where your cashflow is breaking down
Our free Cashflow Diagnostic takes 2 minutes and shows you which of the 8 cashflow holes is draining your business - and what to do about it
Run Diagnostic
