What's the Difference between Cash Flow and Net Income?

There are many things that affect the cash flow of a business that are not directly related to its income statement. For example, if you buy a new company truck, the cash outlay affects your cash flow (because money went out), but the truck will be set up as a capital asset on the balance sheet and therefore won't appear on the income statement. It will start to hit the income statement in small pieces when you depreciate it.

Cash flow represents real time movement of cash, whereas the income statement shows the results of operations by using the accrual method (more on this later). An example of this is that sales will show up on an income statement as soon as they occur, even if you haven't received the money yet. This sale won't impact the cash flow of the business until it is collected. The length of time it takes to collect the money from that sale can help or hurt the cash­flow position of the business.