Cash Flow Statement
Also known as: Statement of Cash Flows
A cash flow statement tracks the actual money moving in and out of your business over a period, separate from profit on paper.
What it actually means
Profit and cash are not the same thing, and the gap between them is where otherwise healthy businesses fail. The cash flow statement sorts movement into three buckets: operating, meaning day-to-day trade; investing, meaning buying or selling equipment; and financing, meaning loans, owner contributions, and draws. It answers the question every owner eventually asks — the P&L says we made money, so where is it? The answer is usually unpaid invoices, inventory sitting on shelves, a loan principal payment, or an owner draw, none of which appear as expenses on a profit and loss statement.
A month showing $9,000 of profit can still end with less cash than it started with if $12,000 of that revenue is sitting in unpaid invoices.
A shop can be profitable and still miss payroll if customers pay on terms and suppliers do not. Watching cash alongside profit is what tells you whether you can raise ad spend this month or need to wait for receivables to land.
Related terms
A profit and loss statement shows revenue, costs, and expenses over a period of time, ending with the profit or loss that is left.
A balance sheet is a snapshot of what your business owns, what it owes, and what is left over for the owners on a specific date.
Accounts receivable is money customers owe you for work already delivered but not yet paid for.
Cash accounting records money when it moves; accrual accounting records it when it is earned or owed, regardless of when it is paid.
Want this metric run for you?
Karbon Agency runs Meta, SEO, and landing pages for local businesses — and shows you every metric, live.