And that man/woman is the CEO. Cash flow is the actual movement of money - paying payroll, paying vendors, receiving cash from clients (not just sending out th

And that man/woman is the CEO. Cash flow is the actual movement of money - paying payroll, paying vendors, receiving cash from clients (not just sending out the invoice). Lack of cash flow is what makes companies go bankrupt. Allocations are methods to attribute income and/or expenses to groups. It may be something simply such as dividing up an enterprise software license for email by the number of employees and allocating that expense to their department. It can be more difficult / squishy such as how to attribute brand marketing spend to various product lines. Generally, companies use allocations because they are trying to understand the profitability of something (a product, geography, client, etc). Your example of the million dollar spend is a good one. Very easy to see where the cash flow went (Developers, Sales people, rent, etc) but the important question to assist on future investment decisions is how much should be allocated to Project X vs Y vs Z. One would also need to understand how much cash was generated by Project X, Y, and Z so they can determine the ROI (Return On Investment) for each project. Knowing the ROI is important in making future investment decisions.