Cash flow
Cash flow is the movement of money in and out of a business over a given period, reflecting its ability to fund operations and growth.
Cash flow measures the net amount of cash generated or consumed by a business. Positive cash flow means more money is coming in than going out. In SaaS, advance billing and annual contracts significantly improve cash flow compared to monthly billing.
Example: A SaaS company collects $500,000 in annual subscription payments in January, giving it strong positive cash flow at the start of the year even though the revenue will be recognized monthly over 12 months.
