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Cash flow is the measure of money flowing in and out of your business at any given time. In an ideal business cycle, you will always have more cash flowing in than flowing out. The reality is however, that most businesses have to produce or deliver goods/services to their customers while also paying their staff and suppliers before they get paid themselves.

This lag in payments in and payments out is often a major challenge for businesses and how well it is managed is critical to the business' immediate financial health and long term sustainability.

The task of managing cash flow is increased in complexity as the number of transactions and amounts of money involved grows, also resulting in greater impacts for the business if it is not managed well.

As a simple test, a sign of a healthy cash flow is always having cash available to pay all wages and bills on time. When businesses cannot do this, they can face a "cash crisis". In this situation they can have trouble accessing supplies and potentially disrupt their operations and ability to generate revenue.

Cash inflows are any receipts of cash to a business and can include:

• payment for goods or services from your customers
• receipt of a bank loan
• interest on savings and investments
• shareholder investments
• tax returns

Cash outflows are any cash outgoings and can include:

• purchase of stock, raw materials or equipment
• wages, rents and daily operating expenses
• loan repayments
• income tax, payroll tax and other taxes
• asset purchases.