TABLE OF CONTENTS In this chapter you will find out about the importance of cash flow. We will be looking at the published cash flow statement and the internal document which is used to monitor cash flow: the cash flow forecast.
Suppose that one morning you wake up with the most brilliant idea for a business. You cannot believe your luck in that nobody else has thought of it and it is obviously an absolute winner! There is no doubt that if you embark on this venture then you will be a millionaire by Christmas. The only problem is that you will need plenty of capital, and your savings will not be sufficient.
Undaunted, you ring your bank manager to arrange an ppointment to negotiate a loan. You are told that the manager will be leaving for an extended holiday that afternoon, but that you can be seen this morning. Otherwise you will have to wait for two weeks and that will be too late - somebody else will get into the market before you!
So you jump into the car and drive towards the bank in plenty of time for your appointment. Then you notice that you do not have enough petrol to reach town so you stop at the petrol station. A big notice states Please do not put petrol into your vehicle if you do not have the means to pay At this point you realise that in your rush to leave...
