Our expert bookkeepers here at Bench have built a Cash Flow Statement template in Excel that you can use to analyze your small business cash flow in a specific reporting period.
What is a Cash Flow Statement?
A statement of cash flows is a financial statement that tells you how much cash you have on hand for a specific period. It’s used together with the income statement and balance sheet to give you a full financial picture of your business.
The statement is split up into three sections:
- Cash from operating activities
- Cash from investing activities
- Cash from financing activities
Between those three types of transactions, you’ll see every cash transaction that can possibly happen in your business.
A completed cash flow statement will show your net cash: all your cash inflows and all your cash outflows, whether that’s a positive or negative number. (Note: “cash” can mean actual cash, or cash equivalents—liquid assets).
There’s two ways of preparing a cash flow statement: the direct method, and the indirect method. The direct method just adds up all the cash inflows and outflows. The indirect method works backwards from the income statement and balance sheet to imply your net cash flow. The direct method is simpler, but if your business is already using an income statement and balance sheet, you’ll want to follow the indirect method.
How a Cash Flow Statement can help you
A Cash Flow statement allows you to:
- See where your money came from
- See where your money is being spent
- Understand the “cash reality” of your business, rather than the abstract accounting
- Help you plan your future cash flows more intelligently (you’ll need to do some cash flow projection for that)
- See a simple “cash balance” for the month
In addition to understanding your business in a whole new way, cash flow statements can also help you secure a loan (sometimes investors want to see them to make sure your business is actually making money).
How to use this Cash Flow Statement template
Cash Flow Statements are most useful for business owners who already have an Income Statement of their business. Once you open the template in Excel, you’ll see exactly where to plug your numbers into.
If you don’t have Income Statements prepared, that’s okay. You’ll still be able to use this Cash Flow template if you have up-to-date bookkeeping.