That means that the cash flowing into her business is out of synch with the cash moving out. The result is that she is temporarily caught short when her bills come due. Business analysts report that poor management is the major reason why most businesses fail. It would probably be more accurate to say that business failure is due to poor cash management. In this section we'll take a look at the cash flow process to find out.
Cash is ready money in the bank or in the business.
These might be converted to cash at some point in time, but it takes cash on hand or in the bank to pay suppliers, to pay the rent, and to meet the payroll. A lesson that all entrepreneurs learn is the difference between profit and cash. Profit is the amount of money you expect to make if all customers paid on time and if your expenses were spread out evenly over the time period being measured. Cash is what you must have to keep the doors of your business open, while you are busy trying to make a profit . Over time, a company's profits are of little value if they are not accompanied by positive net cash flow.