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The cash-flow statement is the single most important tool for the success of any business. Most lawyers, and even many large law firms, begin to realize that they are in trouble only after the money ceases to come in the door. However, cash flow cessation is usually the last symptom of a downward spiral that started long before.
An example of warning signs can be seen in the world of sports: A law practice is like an athlete who is exercising in hot weather. Hydration ' maintaining adequate body fluids ' is critical to an athlete's performance and health. In fact, dehydration can lead to serious medical problems such as heat exhaustion, heat stroke, and ultimately death. Unfortunately, the body's ability to detect dehydration is slow. There is a lag between the time the body becomes dehydrated and when it sends the thirst signal to head to the nearest water supply. Athletes anticipate this problem by drinking plenty of fluids before and during exercise, even if they are not thirsty.
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