Cash flow is important to keep an eye on. This is because you should always have enough money to spend immediately. This allows you to meet debts such as paying sales tax as well as purchases to generate new revenue.
The results can give a distorted picture of how financially sound your business is. This is because invoices represent money to come, but until it is received you can't spend it. Delivery periods also have an impact, "smearing" results over a period of time.
Thus, you may see a loss in the results even though the cash flow is positive. This is because there may be old payments coming in, even though the period in the results is for example negative. And vice versa, you can infer from the result that it looks rosy with good numbers, when in reality you have negative cash flow and may be almost completely out of cash. If you run out of cash to spend, then your whole business fails. So avoid long-term, negative cash flow.
And that's why you also keep an eye on what is actually debited and credited to your financial accounts. Regardless of what the invoices and your results tell you.
Working Capital
Your cash flow is all about money. But besides money, you can also have stuff you can sell. Like your inventory, of course. Inventory is on your balance sheet under 'vlottende activa'. These are things you expect to turn into money this year. Working capital is therefore broader than cash flow. Working capital includes the value of things you are going to convert into cash in the short term. You can find your working capital in the "Key Performance Indicators (KPI)" report.