You have heard many say, "cash is king" or "cash
is the lifeblood of every business. This is true. I cannot imagine
a cashless business surviving.
In the accounting world, and financial recording is done on an
accrual basis. This means that day-to-day transactions are not
necessarily recorded on a cash basis or as you would see them on a
business bank account. Bank statements normally just provide a
snapshot of a business' daily cash movements. As a result, most
business owners and their accountants miss the issue of cash
flow.
The only time you will see a cash flow report in most businesses
is when a set of financial statements has been drafted and a cash
flow statements is presented. The challenge here is that the cash
flow statement in the financial statements is on annual historical
financial information. This information is only going to show you
what has been (i.e. how cash was applied in the
business) and not what could be (i.e. a forward
looking approach
