Jurisdiction(s):
United Kingdom

Key definition

Cash flow definition

What does Cash flow mean? Cash flow describes the net movement of cash and cash equivalents into and out of a business during a period. For lawyers, it is central to assessing liquidity, debt service capacity, covenant compliance, going concern, and insolvency risk. It is a descriptive expression rather than a statutory legal term, though accounting standards (IFRS IAS 7; UK/Irish GAAP FRS 102, with small/micro exemptions) prescribe how cash flows are presented. The primary source is the cash flow statement in the annual report and accounts, showing operating, investing and financing cash flows, and whether cash was generated or consumed and how. Unlike profit...

Law firm cash flow forecasting and bank finance: profit and loss account versus cash flow, lender assessment, and example forecasts

Published by a LexisNexis Practice Management expert

Practice notes

This Practice Note sets out the factors that can cause a law firm to fail and what a bank expects to see if it is to keep backing the firm with further finance.

The rationale for cash flow forecasting

The immediate danger for any legal practice is exhausting its cash, which can bring the firm down. Receipts from clients are often slow, while outgoings are settled swiftly, leaving firms exposed if cash flow is not tightly managed and capital is inadequate. Failure is most likely at launch, during rapid expansion, or when fee income falls sharply and without warning.

By preparing and refreshing cash flow forecasts on a regular basis, the firm can anticipate periods when:

it expects to hold excess cash, and
it may require additional external funding

When these points are planned in advance, securing extra finance is more achievable than approaching the bank only when the business is close to a crisis...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Jon Whittle

Jon Whittle Consulting Ltd

Jon is a specialist in developing legal businesses using market intelligence and customer insight to implement successful programmes for change. He works with law firms to create sustainable growth alongside successful project management, implementing new technologies and evolving business operations. Jon has been working on the future of law firms for more than fifteen years, focusing on the strategies and tactics that help firms build real and defendable competitive advantage. Whilst working in a senior leadership role at LexisNexis he was also the architect and author of the widely read LexisNexis Bellwether Reports and is a recognised authority on how law firms can build and grow. Previously, Jon worked, for two decades, at board level, in some of the UK’s largest media companies, transforming traditional businesses into growth in the digital age. He now applies the fruits of this experience,...

Web page updated on 21/05/2026

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...