A cash flow statement is one of the most important tools in managing your finances. It tracks the inflow and outflow of cash in your business. Cash flow statements can reveal payment cycles or seasonal trends that require additional cash to cover payments.

To prepare a forecasted cash flow statement, you will need the following:

  • Opening bank balance (will be nil if you are a new business)
  • Cash inflow (not exhaustive list)
    1. Sales from products or services
    1. Sale of assets
    1. Debtor income
    1. Other income i.e. interest received
  • Cash outflow (not exhaustive list)
    1. Stock purchases
    1. Professional fees
    1. Advertising & marketing fees
    1. Interest paid
    1. Utilities
    1. Loan repayments
    1. Insurance
    1. Wages
    1. Other expenses

By adding inflow and subtracting all outflows from your opening balance, you should arrive at your closing bank balance.

In addition to cash flow statements, business can/should also complete the following financial statements:

  • Profit & Loss Statement: This provides a profit and loss over a given period
  • Balance Sheet: Provides net value of assets and liabilities at a given point in time

All three financial statements, along with financial ratio analysis can help identify potential issues which can then be rectified to ensure the continuity and profitability of the business.

For more information about cash flow statements contact Infinity Group on 9792 2772.

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Infinity Group

Established in 1999, Infinity Group is a multi-service firm that specialise in the areas of Finance, Property, Accounting & Taxation, Insurance and Migration Services.

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