Set up a cash flow statement

A cash flow statement tracks all the money flowing in and out of your business. You can use your cash flow statement to:

• find payment cycles and seasonal trends
• forecast your future business finances
• help predict shortages and surpluses
• plan ahead to make sure you always have money to cover payments.

For each year, you'll need to fill in actual or estimated figures against each of the below items. If you use estimated costs, label and explain them clearly.

You'll also need to clearly state if your figures include or exclude goods and services tax (GST).

Opening balance

In the first month, this will be your opening bank balance. In following months, it will be the closing balance of the month before.

Cash incoming

Cash incoming is money that is flowing into the business. If you are forecasting estimated figures, consider what forms of income your business may have and when. You can forecast cash incoming by looking at previous years, identifying seasonal trends and accounting for regular sources of income.

Cash incoming can include:

• sales
• debtor receipts
• grants
• tax rebates.

Total incoming

Calculate the total incoming by adding all cash incoming items.

Cash outgoing

Cash outgoing is any payment that your company makes. If you're forecasting estimated figures, consider the costs you need to pay to run your business and when you will pay them. You can forecast cash outgoing by looking at previous years, identifying seasonal trends and accounting for your major costs.

Cash outgoing can include:

• accountant fees
• advertising and marketing
• purchases
• rent and rates
• utilities.

Total outgoing

Calculate the total outgoing by adding all cash outgoing items.

Monthly cash balance

Calculate the monthly cash balance by subtracting the total outgoing cash from the total incoming cash.

Closing balance

Calculate the closing balance by adding the opening balance and total incoming, then subtract the total outgoing.