Cash flow

 Store closing down signs
Cash flow problems can lead to a business's closure

Cash is generated by a business through the sale of goods or provision of a service. It is important that businesses have enough cash to:

  • pay employees
  • buy supplies
  • cover business expenses

Cash flow is all the money that comes into and goes out of a business.

There must be more cash coming into the business than there is going out to avoid the company going into liquidation. This would mean they are no longer able to trade.