Cash flow (kasstroom)
Cash flow is the change in cash and cash equivalents through receipts and payments in a period. It differs from profit through timing and non-cash items.
What does cash flow mean?
Cash flow is the change in cash and cash equivalents through receipts and payments in a period. It differs from profit through timing and non-cash items.
A sale on credit raises turnover and receivables, but not yet cash. Depreciation reduces the result without a direct payment in that year.
How does it work?
A cash flow is a receipt or payment in cash and cash equivalents: cash on hand, bank balances and what is equivalent to them. Profit is something else, because income and expenses are allocated to the financial year to which they relate, regardless of whether they led to receipts or payments in that year (art. 2:362(5) DCC). The two diverge through timing (turnover on account, prepaid costs), through expenses without a cash flow (depreciation, provisions) and through cash flows without result (investment, repayment, dividend, VAT).
RJ 360 divides cash flows into three groups: operating, investing and financing. Together they explain the movement in cash and cash equivalents in the financial year.
Example
A web shop (BV) makes € 20.000 profit after tax in 2026. Depreciation is € 5.000: not an expenditure, so added. Receivables rise by € 10.000 and inventory by € 8.000: deducted. Operating cash flow: 20.000 + 5.000 − 10.000 − 8.000 = € 7.000. The BV buys a delivery van for € 18.000 and repays € 6.000 on its loan. Total cash flow: 7.000 − 18.000 − 6.000 = € 17.000 negative. The bank balance falls from € 25.000 to € 8.000, in a year with a profit.
In the annual accounts
Cash flow statement and reconciliation to cash and cash equivalents.
Difference from profit
Profit measures whether the company has earned more than it consumed in the financial year; cash flow measures whether more money came in than went out. Even over several years, profit and total cash flow remain different quantities: investments, financing and distributions change the cash balance without changing profit in the same way. A growing company often has a profit and still a negative cash flow, because inventory and receivables are financed in advance.
Common mistakes
- Reading profit as cash flow
- Booking loan drawdown as turnover
What to watch for
- Compare profit and the movement in the bank balance every year and explain the difference in four lines: depreciation, working capital, investments, financing.
- Test a planned dividend against the expected cash flow. The board must assess whether the BV can keep paying its due debts afterwards (art. 2:216(2) DCC).
- Medium-sized and large entities record cash flows in a cash flow statement; for micro and small it is not mandatory.
Legal basis and source
RJ 360
Frequently asked questions
Can a profitable company go bankrupt?
Yes. A bankruptcy follows from being unable to pay debts that are due, not from a loss. A company that makes a profit but has its money tied up in inventory and unpaid invoices cannot pay wages or the bank.
Is kasstroom the same as cashflow?
Yes. Do note the rule of thumb profit plus depreciation, which is also called cashflow: it does not take working capital, investments and repayments into account.
Read more
Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
Get started