Compiling an effective cash flow statement

April 23rd, 2014


Every business needs to forecast its cash flow


Reliable cash flow is the lifeblood of any successful enterprise, which is why it is so important to compile a yearly cash flow statement.

This will give you an overview of the money coming into and going out of your company, giving a much better idea of what state your business finances are in.

It is a good idea to update this document on a regular basis, as this will give you the most up to date information and enable you to make timely and efficient decisions.

You might want to divide your statement into three sections to make it easier to control: the cash flow resulting from operating activities, investments and financing initiatives.

Opening balance

This is the figure that represents how much money is in your business account - for your first statement, use your opening balance.

In the small business cash flow statements that follow, write down the closing balance from the previous month and move forward from there.

Incoming cash

This section of your document should take note of any cash that is working its way into your business.

It could be sourced from a range of areas, including sales, the sale of assets and any payments that have been received from your debtors. Any other income can be outlined in this section.

You should then add up all the incomings over the course of the month to gain a total figure of how much money your business has earned.

Outgoing cash

Use this section of your statement to log all the expenses faced by your company over the allotted time period.

This will include a range of factors, including any purchases made, solicitor fees, interest paid, utilities and rent payments. Make sure you don't miss anything, as this could affect your understanding of business finances.

If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].