About 70% of all business failures occur because of poor cash flow management.  Firms which are profitable find it impossible to continue trading because they are unable to meet their current debts.  Often cash is tied up in stocks which can’t be used immediately to pay their bills.

Businesses that are starting up should produce a cash flow forecast.  This will hopefully identify any periods where shortfalls in cash will occur, allowing the firm to arrange a short-term loan or overdraft.

Cash is constantly moving in and out of a business.