Need to make a cash flow statement? Look no further! With this sample cash flow statement and free template, you can make your own in record time.
Pro-tip: Understanding cash flow
Cash flow is a term used to describe the relationship between outgoing and incoming payments over a period. If you have positive cash flow, you’re earning more than you’re spending. That’s the sign of a healthy business.
A cash flow statement shows how much money went into your business and came out of your business over a period of time, for example a month, a quarter or a year. It shows whether your business is liquid, in other words, whether you have enough cash available to cover costs.
Unlike a cash flow budget—which attempts to predict your businesses cash flow in the future—a cash flow statement shows actual numbers from a past period.
Why is a cash flow statement important?
The cash flow statement is one of three main financial statements. Some businesses have to submit a cash flow statement to the tax authorities every year.
Even if your business is not required to submit a cash flow statement, it’s a handy financial tool that helps you review the financial health of your business: You want to know if you’re earning more than you’re spending and the cash flow statement will tell you that.
Additionally, creditors—for example banks—or investors can review your cash flow statements before partnering with or investing in your business.
Pro-tip: A cash flow statement might not match your accounting
Confused by discrepancies between your accounting and your cash flow statement? That’s actually not a problem. In a cash flow statement, you calculate using payment dates, while in your accounting, your accounts payable increases the date that your supplier raises the invoice.
For example, if you purchase office supplies for $1 000 on 30th June, your accounts payable will increase by $1 000 on that date. However, if you receive an invoice that you pay on the 10th July, the payment will show in the month of July on your cash flow statement.
Sample cash flow statement
Here’s what a sample cash flow statement for a year could look like:
| Opening balance | 120 000 |
| – | |
| RECEIPTS | |
| Customer receipts | 100 000 |
| Other receipts | 15 000 |
| Total receipts | 115 000 |
| – | |
| PAYMENTS | |
| Vendor payments | 70 000 |
| Purchase of fixed assets | 3 500 |
| Additional operating expenses | 1 200 |
| Total payments | 74 700 |
| – | |
| Net cash flow | 40 300 |
| Closing balance | 160 300 |
Note that you could have other receipts and payments than are shown in this example.
Ready to make your own?
How do I set up a cash flow statement?
First, decide which period you want to cover, such as a month, a quarter, or a year.
Then fill out the fields in the cash flow statement template using your bank statements. The bank statements show incoming and outgoing payments for the period you’re covering. It’s a good idea to have a separate bank account for your business so it’s easier to see what you’re spending and earning.
If you use invoicing software you can also get information about your incoming payments there.
Pro-tip: A negative cash flow isn’t necessarily a bad sign
If you’ve just expanded your business, for example by taking up a new loan, hiring more employees, or opening another office, you might have a negative cash flow for a short period. Bear in mind that the cash flow statement also only shows a certain period.
Your statement might cover a month where you incurred a lot of costs working on a project, and thus show a negative cash flow, but once you were paid the month after, your cash flow stabilized.
However, keep in mind that you don’t want to operate with a negative cash flow in the long term, as it means you’re spending more money than you’re earning.
