Managing cash flow
Accounting systems are backward. That is, they are concerned primarily with what has already happened. Moreover, they do not build up cash reserves to meet commitments or warn you when you are about to experience a liquidity crisis (run out of cash). Accordingly, you have to make your own arrangements. This is not too hard. When you run through the process of planning and budgeting discussed in the following few chapters, you identify all your major commitments and you know what is coming.
Right now, since we are discussing the nitty-gritty of making payments, take a look at the following list of expected receipts and payments. It appears to project that the bank balance will remain healthy. However, if the client is a week ...
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