Definition
The discipline of tracking money coming in and money going out over time so a business stays solvent and can fund its own growth. It is a common failure point for small businesses that are profitable on paper, because profit and available cash are not the same thing.
What it looks like in practice
Best spring in years for an HVAC company: installs booked solid into June, and on paper the strongest quarter the owner has ever had. In practice, equipment for those installs is paid up front, two seasonal techs go on payroll in April, and the commercial accounts pay on net-45. Money leaves in April; money arrives in June. Cash flow management is putting that on a calendar before April; spotting that the low point lands the week of the fifteenth, moving one install to a deposit structure, and lining up a credit line as backup rather than discovering the gap the morning payroll runs.
Why it matters
Cash is what keeps the doors open, and a healthy P&L is no protection against an empty account on the fifteenth. The trouble is almost always timing: what you owe comes due before what you're owed shows up. Growth makes it sharper, not softer; more jobs mean more material and labor paid out ahead of collection, which is how a busy season can be the one that breaks a business. Watching the shape of money in against money out gives an owner enough warning to act early, whether that means faster invoicing, a deposit policy, or turning down work you can't float.