“Cash Flow Break Even” occurs at the point when a company’s cash flow is neither positive nor negative, such that its incoming cash (e.g., Revenues) is equal to its outgoing cash (e.g., Expenses, both fixed and variable).

It is crucial for a company to calculate its point of Cash Flow Break Even regularly and accurately, both for budgeting and financial planning and to determine the need for additional Financing.

Cash Flow Break Even often is a significant milestone in a Startup’s evolution as it then may have the ability to be Cash Flow Positive and sustain its operations without additional (or at least with less) outside funding and potential Dilution.

See also Break-Even Point.