A business example
A wholesaler begins the month with ₹80,000, collects ₹40,000 and makes ₹90,000 of payments.
Opening cash
₹80,000 is available at the start.
Net movement
₹40,000 in − ₹90,000 out = ₹50,000 net outflow.
Closing cash
₹80,000 − ₹50,000 = ₹30,000 remains.
What this shows
Cash flow explains the movement between the opening and closing balances. It does not, by itself, show the month's accounting profit.
What it is often confused with
A profitable business can still have a cash shortage because income and payments occur at different times.
What to look at in your business
Forecast collections, supplier payments, salaries, tax and borrowing movements separately.
Context and further reading
This entry explains the business term. The related guide below provides the next layer of context; any applicable legal test depends on the transaction and relevant period.
Kosha.Services · Updated 2 October 2026