Understanding Your Cash Flow Statement

Cash flow is THE biggest concern for small businesses. Which makes knowing what a cash flow statement is and how it can help your business THE most important thing for a small business owner to be doing.

There are 3 core sections that make up a cash flow statement:

• Operating Activities

• Investing Activities

• Financing Activities

Each of these sections tells a story of where your business's cash is going. For example how much owners withdrew, total loan funding the business received, the amount of loan repayments made, what was spent/received from purchasing/selling vehicles, what was spent/received from purchasing/selling real estate, and how much was made from operating.

These sections will all have a balance of some sort and can be tracked over time so you can ensure that you are not veering off coarse. You can set goals to increase the end balance of Cash for the business and so much more.

Like your P&L, it's CRUCIAL that your cash flow statement be reviewed monthly so that any veering is caught and addressed quickly.