Understanding Cash Flow

by Neel Desai

Cash Flow measures the amount of actual money coming in and leaving the business.

This is broken down into four key areas to track and net out for a number that represents your net cash for any particular month. We break your cash flow down into four key areas:

  • Subscriptions : The revenue coming into your business from your subscription plans
  • One time : The revenue coming into the business from one time charges to customers
  • Refunds : The money leaving the business through refunds to customers
  • Fees : The money leaving the business through credit card processing fees charged by your billing system

A useful exercise is to look at the breakdown of your cash flow to analyze where the majority of your revenue is coming from and where you’re leaking the most cash out of your business. If most of your cash is coming from one-time charges, then maybe it’s time to add a subscription model. If your refunds are substantial, then you should probably figure out how to shore up that revenue.


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