Managing cash flow effectively is an important part of the successful management of new and existing businesses. This topic introduces you to cash flow and cash flow forecasts and explains their importance.

Cash flow is entirely different from profit. Profit is the extent to which a business's revenue exceeds its total costs over some period of time. In contrast, cash flow is the way in which money moves through the business.

When faced with cash flow problems, managers may use a range of solutions to cash flow problems

All of the proposed solutions to cash flow problems have disadvantages. Managers have to take these into account when deciding how to tackle a cash flow problem.

It is common for a business to experience cash flow problems. These can be managed if the managers and entrepreneurs are aware of the possibility and are prepared to take the necessary actions to overcome them.

A cash flow problem arises when a business struggles to pay its debts as they become due. If a business experiences negative net cash flow over a period of time, its cash position can become very weak.

It is possible to construct a table of the inflows and outflows of cash that are expected by a business's managers. When such tables are drawn up as part of the process of planning a business's activities, they are called cash flow forecasts. However, when completed as a record of trading, they are called cash flow statements.

If a business has a positive cash flow position, it means that it avoids periods in which it has a negative cash balance. This offers a business a number of benefits.

Managing a business's cash flow effectively is a very important task for managers. If a business does not have enough cash available to pay its bills, it could fail.

Cash flow is the money that flows into and out of a business on a day-to-day basis. There are several reasons why a business would receive cash inflows as well as many likely causes of outflows of cash from the business.

Cash flow is the money flowing into and out of a business over a period of time. Businesses forecast their cash flows to reduce the chance of facing cash flow problems.