cash flow

What is cash flow?

Cash flow is the movement of money in and out of a business over a specific period. Positive cash flow means more money is coming in than going out.

Cash Flow explained

Cash flow is the #1 financial concern for freelancers and small service teams. You can be profitable on paper and still run out of cash if invoices are paid late. The three levers: (1) shorten payment terms (Net 15 vs Net 30), (2) invoice promptly (don't wait until month-end), (3) follow up consistently on overdue invoices. 42% of freelancers have missed personal bills because of client payment delays.

Example

A freelancer earns $8,000/month but has $6,000 in expenses due on the 1st. If clients pay late (average 38 days), the freelancer has a 7-day cash gap where expenses are due but payments haven't arrived. Shortening average collection to 20 days eliminates the gap.

How this connects to Clockout

Clockout addresses all three cash flow levers: track time daily so invoices go out faster, send invoices directly from tracked sessions, and automate overdue reminders to shorten collection time.

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Related terms

Learn more

Accounts Receivable

Accounts receivable (AR) is the total money owed to a business by clients for invoiced work that has not yet been paid.

Days Sales Outstanding

Days sales outstanding (DSO) measures the average number of days it takes to collect payment after an invoice is sent.

Payment Terms

Payment terms are the conditions under which a seller expects to be paid, including the due date, accepted payment methods, late fee policies, and early payment discounts.