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How Business Plans Work


Financials: Cash Flow Statement

Your cash flow statement shows the amounts of cash needed to go out over a period of time, as well as cash that is coming in. It is very helpful for planning for large purchases, or to help be prepared for slow periods in the business. In simple terms, your Cash Flow equals your cash receipts minus your cash disbursements. What's left over is your Net Cash Flow, and when you add that to your beginning balance (before any receipts) you get your Cumulative Cash Flow. As a startup, when you complete your Cash Flow Projection, may want to include two columns for each month - one for your projections, and one for your actuals. The content of the statement consists of:

  • Cash Receipts - include all sources of cash inflow such as cash sales, collections from credit sales, loans, etc.
  • Cash Distributions - include all of your fixed and controllable expenses.
  • A summary of your current cash position - begin with your opening balance, add your cash receipts, subtract your cash distributions, and you're left with your new balance.

You may also need to add notes to your Cash Flow Statements identifying certain cash terms, other sources of income, and explaining changes in your monthly distributions.

(See sample Cash Flow Statement.)


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