Why This Matters
Cash flow is the most honest indicator of financial health. Accrual accounting can mask timing problems — revenue booked but not collected, costs deferred but still due. For mid-market companies without deep credit facilities, a cash flow shortfall is an existential risk, not just an accounting variance. Monitoring cash flow separately from profit is the baseline for sound financial management.
Where This Fits
This term sits within the Reporting Infrastructure area of Performance & Control.