THE CONCEPT OF CASH FLOW

Simply defined, cash flow is the movement of funds in and out of a

business, while cash flow management focuses on the timing of moving

funds.

There are a variety of methods for funding projects, ranging from

internal sources (the project is part of the corporate budget) to external

means (use of government ‘‘seed’’ money or direct investment).

The term cash flow is used to describe the net difference, at any point in

time, between income (revenue) and project expenditures; negative cash

flow is outgoing, while positive cash flow is income.

With major projects, where development costs are enormous, the

investment decision is based on the anticipated number of sales and

the period over which the product will be sold.