The foundation of every company depends upon the cash flow statement. If you have just started your business, cash flow should be an integral part of financial planning of your business. However, not every company founder tends to be having accounting knowledge or comes from finance background. So, how one would check and forecast cash flow statement?

cash flow statement

If you want to maintain your business finances, you need to forecast your business cash flow statement. To tackle this, I’m going to talk about the complete forecast cash flow statement below. But before that let me give you gist of this article.

What do we understand by cash flow statement (CFS)?

In simple words, cash flow statement is the recording of flow of cash occurring in and out of the business. Being a business owner, you will be spending money on management and receiving money from clients, right. Every transaction pertaining to business will be recorded in your company’s CFS.

Let’s now dig a little deeper and…

Understand the concept of cash flow forecasting

Friends’, understanding the concept of cash flow forecasting is as simple as you just read the above definition. Simply putting, this is a process of estimating the flow of cash in and out of a business over a specific period of time.

What’s the importance of cash flow forecasting?

Any guesses? No, let’s talk about it. Basically, cash flow forecasting helps companies, accounting firm, and businesses predict their cash positions, avoid money crunch, and earn returns on any cash surpluses. So, it’s all about forecasting the future cash expenditure and revenue you will be generating in the business.

Let’s move further to the main part of this article.

Important tips to forecast cash flow statement of your business

Below I’m going to talk about some of the tips which will help you forecast your cash flow statement of your business:

✔️ Determine how much far you want to forecast

The first step you need to follow to determine cash flow statement is determining how far you want to forecast. With cash flow, you can cover anything a few weeks to many months. Planning as far as you can actually help you predict future accurately. Let me tell you that a well-established business always predicts sales pipeline and data based on previous years. In fact, professional providing accounting services in Houstan help clients determine for future cash flow to run business effectively.

✔️ Make a list of cash inflow/ income

Next tip helping you forecast cash flow statement is by listing all your income. What you basically need to do is listing all the cash you’ve generated in the business. Just make a section for each week or month and another section for every time of income you’re generating in the business. Make sure to start with sales you’re making in a day, week, or month. Additionally, include all non-sales income, which are:

  • – Grants
  • – Tax refunds
  • – License fee
  • – Investment from owners and shareholders

If you have other non-sale income sources, then add them in the list.

✔️ Prepare a list of outgoings

What does outgoing mean? It means money you spend on paying thing you purchase from outsider. You never know when you will end up paying money on different things. So, make sure to prepare a list of outgoing as well, which must include:

  • – Employment salary
  • – Assets
  • – Rent of office
  • – Bank loans, fee, and charges
  • – Money spent on marketing and advertisement
  • – Tax bills

No wonder, you will have other things as well where you can spend money on. So, don’t forget to include this in your outgoing list.

✔️ Calculate cash flow activities

Last but not least step comes in determining the cash flow statement is calculating all the cash flow activities. Once you’re done with forecasting the cash flow of your business, all you need to do is calculate it from financial activities. This is what all accountants do offering virtual bookkeeping services in Los angeles. You can avail their services at much reasonable price.

Final review

Guys, this is the only way you can forecast cash flow statement of your company. I hope you have read everything written in this article thoroughly. Make sure to follow all the steps and determine the cash flow statement without having professionals’ help. But if you’re really planning to avail expert’s services then Kayabooks should be your go-to. We provide the best business finance services to clients at pocket-friendly rates.

For any kind of query, feel free to get in touch with us.