2 min read
Definition
Negative cash flow means more money left a business than came in over a period, so the cash balance shrank. It is not always a crisis — a growing or investing business often runs negative cash flow deliberately — but sustained, unplanned negative cash flow is a warning.
In plain terms
A month of negative cash flow because you bought equipment or built stock for a big order is expected and fine. A run of unexplained negative months, eroding your buffer, is a sign that outgoings have outrun income.
Why it matters
The key is knowing whether your negative cash flow is planned and temporary or unplanned and structural. See cash flow red flags.
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