Cash flow

Cash flow is simply the money going in and out of your company's account over a period of time. It tracks the actual movement of money, not profit (the profit calculated on paper): a company can show a profit and yet lack the cash to pay its bills.

Brief

The money that actually comes in and goes out, over a given period
Different from profit (the profit on paper, which is not always in the bank)
Even a profitable company can still run out of cash (money that is immediately available).
The cash flow statement is one of the three basic financial reports

Why does this matter?

Imagine you sell $10,000 worth of merchandise, but the customer won't pay you for another 60 days: on paper, you've made a profit, but your bank account is empty today. That's exactly what cash flow reveals. Tracking it helps you anticipate dips, especially when it comes time to remit GST (the 5% federal tax) and QST (the 9.975% Quebec tax) or pay your employees. Bankeo connects you with a certified accountant/CPA free of charge to prepare your cash flow forecasts, and we'll be there to support you every step of the way.

Frequently asked questions

What exactly is cash flow?

This is about tracking the actual money going in and out of your account, day after day. Not theoretical profit: real money. It answers the simplest question for any entrepreneur: "Do I have enough cash to pay for what's coming up?"

What is the difference between profit and cash flow?

Profit is an accounting calculation (revenue minus expenses), even if the customer hasn't yet paid. Cash flow, on the other hand, only counts the money actually received and paid out. Customer payment terms and inventory purchases often create a discrepancy between the two.

How can I better manage my cash flow?

By creating a simple forecast of income and expenses for the coming months, you can identify potential dips in revenue in advance (payroll, taxes, large purchases). Bankeo will connect you with a verified accountant/CPA free of charge to set up this monitoring with you, at no cost to the entrepreneur, and we'll remain by your side throughout the process.