Cash flow (also called net cash flow) is the balance of the amounts of cash being received and paid by a business during a defined period of time, sometimes tied to a specific project.

Measurement of cash flow can be used:

• to evaluate the state or performance of a business or project.

• to determine problems with liquidity. Being profitable does not necessarily mean being liquid. A company can fail because of a shortage of cash, even while profitable.

• to generate project rate of returns. The time of cash flows into and out of projects are used as inputs to financial models such as internal rate of return, and net present value.

• to examine income or growth of a business when it is believed that accrual accounting concepts do not represent economic realities. Alternately, cash flow can be used to 'validate' the net income generated by accrual accounting.

Cash flow as a generic term may be used differently depending on context, and certain cash flow definitions may be adapted by analysts and users for their own uses. Common terms (with relatively standardized definitions) include operating cash flow and free cash flow.

Discover How Tagetik 4.0 delivers the Cash Flow planning process

For further reading download the following white papers:

• "Financial Planning: mastering the key value drivers" Mario Antonio Vinzia Head of Planning, Administration & Control for EniServizi Professor of Corporate Finance at SDA Bocconi, Milan (Italy)

• "The planning and control of project cash flows and invested capital" Prof. of Managerial Engineering at LIUC Luca Bovo Senior financial analyst – Snamprogetti Spa ed Eugenio Rocco With permission of the publisher this article is taken from Il Sole 24 Ore - Finance and Control, XXIX, vol. 8-9, Milan, originally in Italian and translated in English.

• "Monitoring Project Cash Flows" Luca Bovo Senior financial analyst – Snamprogetti Spa ed Eugenio Rocco Prof. of Managerial Engineering at LIUC With permission of the publisher this article is taken from "Guida alla Contabilità&Bilancio" n. 19/2006, pagg. 24 e segg. – “Monitoraggio dei flussi finanziari di commessa”, originally in Italian and translated in English.

Back to Glossary’s Index

Tagetik delivers a unified software solution that can support Performance Management and Enterprise Governance, Risk & Compliance, Business Intelligence, Collaborative Disclosure Management.

Tagetik 4.0 creates value by simplifying complex business processes for CFOs and CIOs: budgeting, cash flow planning, statutory and management consolidation, cost allocation & profitability analysis, financial close & fast closing, dashboard & scorecarding, collaborative disclosure management, business intelligence and compliance/industry requirements.

Tagetik 4.0 is the solution to translate strategy into operations, manage and control overall performance down to business transactions and improve decision-making across the whole organization while achieving faster ROI and lower total cost of ownership (TCO).

Tagetik operates in 18 countries leveraging a close partnership with Microsoft. Its market experts are totally committed to the success of 400 worldwide customers, including some of the largest Fortune 1000 companies and representing all industries, as well as to foster partnership with system integrators, technology leaders and local consulting specialists.