Cash flow is the net amount of money moving in and out of a business or personal finances. It's a foundational concept in financial management:

• Positive cash flow means you’re earning more than you’re spending.

• Negative cash flow means your expenses exceed your income.

Whether you’re managing a company, a household, or your investment portfolio, tracking cash flow is essential to financial stability and growth.

Types of Cash Flow

1. Operating Cash Flow (OCF)
   This includes cash generated from core business operations such as sales or services.

2. Investing Cash Flow (ICF)
   Cash used or earned from investments, asset purchases, or asset sales.

3. Financing Cash Flow (FCF)
   Money received from or paid toward loans, equity financing, or debt repayments.

In personal finance, your salary would be considered operating cash flow, your returns from investments would be investing cash flow, and EMIs or loans fall under financing cash flow.

Why Do People or Companies Struggle with Cash Flow?

• Overspending or lack of budgeting discipline

• Irregular income streams (common in freelancing or small businesses)

• Excessive dependence on credit or debt

• No emergency reserves or contingency planning

Even highly profitable companies can go bankrupt if they cannot maintain a healthy cash flow.

Practical Tips to Manage Cash Flow

• Track expenses consistently using tools or spreadsheets

• Maintain an emergency fund covering at least 3 to 6 months of expenses

• Improve collections and follow up on unpaid invoices

• Avoid high-interest loans or unnecessary debt

• Invest in income-generating assets like dividend-paying stocks or rental property

Discussion Questions:

1. Do you track your monthly cash flow manually or with digital tools?

2. What has been your biggest challenge in managing personal or business cash flow?

3. Have you experienced a financial crunch despite having a steady income?