Posted by Wayne Messick, AFSB, for OldRepublicSurety
The definition of cash flow is pretty straightforward: It’s the money that comes into your business minus the money that goes out. It’s a part of your CPA-prepared financials and is usually shown in a separate cash flow statement.
Yet cash flow is more than an accounting exercise. It’s a key financial indicator — something your surety company scrutinizes very carefully, as would a bank or prospective buyer of your company.
Without strong cash flow, you can’t pay your bills, meet your payroll, finance new equipment or expand your operation. Let’s look a little closer at cash flow and see how it affects your company.