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Donald Trump once famously proclaimed that "Cash is king." But as most small business owners know all too well, what he really should have said is "Cash flow is king."

Failing to understand

and manage cash flow is the most frequently cited reason that a small business goes out of business. But a business doesn't have to be failing to encounter problems. Even profitable firms can fall into a cash flow trap, and fast-growing firms are particularly vulnerable because their cash demands are that much higher.

So it should go without saying that managing cash flow should be a top priority. Yet one survey found that 46 percent of small business owners failed to list cash flow management as a major preoccupation or said they delegated the task to others — big mistake, according to experts.

A Common Business Quandary
At its most basic, cash flow is simply the amount of money that comes into a business versus the amount that flows out the door to pay bills. The problems arise because the two cash streams rarely match.