Monthly Cash Flow shows how much money a business generates or spends in a given month. It reflects the balance between incoming cash (such as sales, investments, or other revenue) and outgoing cash (such as salaries, rent, and operating costs). Tracking this regularly helps companies understand their liquidity and overall financial health.
Add up all money received during the month, including sales, subscriptions, and any other income sources.
Add up all expenses paid in the same month, such as payroll, rent, utilities, and supplier payments.
This gives you the net monthly cash flow figure.
A positive value means more money is coming in than going out, while a negative value means the company is spending more than it earns.
Cash Flow = Inflows – Outflows
There is no universal benchmark since it depends on company size and stage. However, a consistently positive cash flow is generally preferred, as it indicates financial stability and room for growth.
It provides a real-time snapshot of liquidity, helping companies ensure they can cover expenses and avoid cash shortages.
Profit is an accounting measure that may include non-cash items, while cash flow strictly measures money moving in and out.
Short-term negative cash flow may be manageable if backed by reserves or investments, but a persistent negative trend can threaten business survival.
By speeding up receivables collection, controlling unnecessary expenses, renegotiating supplier terms, or boosting sales.