Cashflow is the flow of a financial transaction. As defined in ‘Investopedia’ http://www.investopedia.com/articles/01/110701.asp
The World revolves around trade. We trade something of value, in exchange for something else of value.  Examples are all around us.
We buy milk from the grocery store, in exchange for money.
We get our car serviced, using the skills of the mechanic in exchange (again) for money.
We trade ‘x’ hours of our time for our boss, in exchange for them giving US money.
And so the revolution of the world continues
Some industries and transactions are more intensive than others but they all require a flow of goods or services in exchange for financial value. This is a cashflow event.

Money coming in and money going out.
Now, before I get a million people email me about the fact that not all exchanges of goods and services are financially based – the VAST majority are.
So back to what is cashflow? (Cash Flow)
Put simply, cashflow is money in or money out.
Cashflow can be either positive, or negative. Positive cashflow is achieved when more money comes in, than goes out. Negative cashflow (obviously) is the opposite where expenses are greater than income.

Cashflow (Cash Flow) has nothing to do with profitability, as Cashflow is dependent upon TIMING.
Let’s look at an example.
A company makes 1 Million dollars ($1,000,000) in profit but goes under because of poor cashflow.
How is that possible??
Remember that Cashflow is about timing.
if the payment of the million dollars is at the end of the contract which takes a year, but the costs incurred have to be paid straight away.
So we have wages, advertising, rent, insurance, vehicles etc etc and all of these expenses are due to be paid. If we don’t have the money in the bank, we go under!
Obviously we can borrow this money from a financial institution to see us through until the contract is paid. This is called a cashflow loan, or bridging loan.
Poor cashflow and cashflow management, in this example result in disaster.
Nothing to do with profit.
The opposite can of course be true too. Just because there is money coming in the door, does not mean you are profitable. It is easy to have good cashflow and still not make any profit. This is where our expenses exceed our income.
In Personal finances, this is referred to as ‘living outside your means’ where as in business it is called making a loss and will show up on the profit and loss statement.
Cashflow can be read on a statement as well, although a cashflow statement is genrally a prediction or forecast, using the knowledge at hand to ‘see into the future’ and accurately predict our real cash position at any given point in time.
Cashflow. Money in, and money out.
But it is all about timing.
Unlike the accurate reporting in the profit and loss statements or balance sheets, Cashflow reporting has some flexibility and that flexibility is in timing.
We can manipulate the timing of income and expenses to ensure that our real cash position is aleays optimised.
If you are new at this, it is worth doing some more research on as cashflow can make or break companies, families, churches and lives.
The success of all of them requires Cashflow management and cashflow control.