Cash Flow
Cash flow is the actual movement of money into and out of a business or household's bank accounts, a different question from profit that can move in the opposite direction in the same month.
In short
Did money actually move, not just get counted as income or expense. A profitable month on paper can still leave the bank account thin if customers haven't paid yet; a big loan can make cash flow look strong while profit hasn't moved at all. BalanceMCP doesn't have a formal cash flow statement yet — cash_position plus reconciliation covers the same ground today.
Also called: cash flow statement, money movement
You might have arrived here asking
- Why is there no money in the bank if I made a profit?
Cash flow is the movement of money in and out of the bank, as distinct from profit, which is income minus expenses on however the books are kept. They are different questions and routinely disagree in the same month.
The disagreement has a small number of causes and they are worth knowing by name. Money can arrive that is not income — a loan, an owner's contribution, a customer paying an old invoice. Money can leave that is not an expense — loan principal, an owner's draw, buying equipment. And income can be recorded before the money exists, if invoices are counted when issued.
Which direction the gap runs depends on the business. One that invoices and waits shows profit before cash. One that borrows or is paid up front shows cash before profit. Neither is a problem in itself; being unable to say which applies to you is.
What exists here is a live cash position, not a formal cash flow statement — the three-section operating, investing and financing document a lender expects. The distinction is worth stating because the two are often called the same thing.
What people get wrong
- Assuming a profitable P&L means the bank balance is healthy — the two can move in opposite directions in the same month.
- Expecting a formal, categorized cash flow statement from BalanceMCP today — it doesn't exist yet; cash_position and reconciliation are the current tools for reasoning about the same gap.
- Treating borrowed money as income because it made the bank balance jump — a loan is a liability, never profit, no matter how it looks arriving in the account.
Common questions
- Can a business be profitable and still run out of cash?
- Yes — income on paper can look strong, largely because customers haven't paid yet, while actual cash to cover bills runs thin. Profit and cash flow are genuinely different questions.
- Does BalanceMCP have a cash flow statement?
- Not a dedicated, formal one yet — no breakdown into operating, investing, and financing activities. Today, combine the P&L with a cash_position snapshot to reason about the same gap.
Machine-readable: /api/knowledge/concept:cash-flow