Monthly Cash Flow Statement - Get Free Excel Template
Monthly Cash Flow Statement. Download our FREE template of the monthly cash flow statement with ease
A Monthly Cash Flow Statement is a financial report which shows aggregated data about all cash inflows a company gets from its running operations and external investment sources. Cash outflows for business activities and investments are shown as well.
Investors and analysts require a portrait of all the transactions that go through the business, which is offered by financial statements. The Monthly Cash Flow is the most intuitive and easy to read of all the financial statements. Just because it reflects the cash made by the business in three main directions—through operations, investment, and financing. The sum of these three segments is called net cash flow.
Monthly Cash Flow Statement Benefits
Spot problems with customer payments
Identify cash gaps and surpluses before they happen
Make sure that the business can afford to pay
Is an important discipline of financial planning
Plan for Future Growth
See Where The Cash Is Coming In and Going Out
Predict cash shortages and surpluses
Estimate expenses for next periods
Avoid cash flow problems
Prove to lenders your ability to repay on time
It is part of the reports set you need.
It doesn't matter you are worried about cash or not, setting up, and managing a cash flow forecast should be a cornerstone of your reporting set.
It's the main report of your business that must have in place to grow sustainably.
Before you rush into rent more office space or making a new hire, you should always run a Cash Flow scenario. You can model how that action would impact your cash balance in the nearest future.
Knowing whether or not plans are possible is crucial to minimizing risk.
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Manage accounts receivable.
By creating a Cash Flow Forecast that takes invoices and bills into account, you'll be more easily able to identify who is systematically paying late. You could even go on to model different payment dates on overdue invoices to see the real effect of late payments on your cash flow.
Manage surplus cash
Most companies don't have excess cash in the bank. It is a well-known situation. But managing surplus cash for reinvestment in new market opportunities, or debt repayments can be essential to keeping stay in the business.
Managers are entirely ready to plan for what to do with the cash surplus if they have the forecast of when and where the business will have surplus cash in the bank account.
Cash Flow Statements Projection will provide supplementary guidance on what to do with a cash surplus.
Predict the Influence of Upcoming Changes
Does your company plan to purchase new equipment or to launch a new product? Cash Flow Projections enable you to obtain a complete picture of the effect that specific changes will have on your cash flow.
When planning your finances in the Cash Flow Forecast Excel Template, you will forecast cash inflows and outflows based on future invoices, bills due, and payroll.
You can then create multiple "what if" scenarios, such as buying new equipment to choose the best way for you.
Forecasting shows you how the upcoming changes will affect your cash balance.
Track your spending and staying within budget
Have you written a vague idea of cash inflows and cash outflows on the back of a napkin? All is well and good.
Looking at the income statement will give you a snapshot of the past business performance, but it won't show the future in terms of the cash flow.
With a cash flow forecast, you can plan future cash inflows and cash outflows and compare it to the budget, which can be invaluable information.
External stakeholders, such as banks, may require a regular forecast.
If the business has a bank loan, the bank will ask for a cash flow forecast regularly.
Prove You Can Pay Back the Loan You Requested
When you apply for a business loan, bankers will study your cash flow forecast in an attempt to answer this question: Can this business pay back the loan?
Requesting a loan without showing your Cash Flow Forecast for paying it back is a common way to land in the rejection pile. It is exceptionally accurate if your current cash flow won't cover all of your monthly operating expenses — plus your loan payment.
Don't fall into this kind of situation. Use Cash Flow Projections to strengthen your case by showing the banker exactly how you plan to use the loan and when you will start repaying the debt.
This type of forecasting helps you create a road map that can impress a lender with the confidence they need to approve your loan.