Managing and Maintaining Cash Flow Statements

Simplify your financial tracking and business intelligence tools to better gauge your business’ cash flow

Understanding Cash Flow

Cash is king. That is the mantra that is repeated over and over as a basis for business. In order to generate revenue, however, there are always costs. With these costs in mind, it is important for businesses to understand cash flow, and specifically look at cash flow statements.

cash flow statement is a measure of how funds are obtained and utilized during a certain period of time. It is arguably one of the most important metrics for business owners to know and understand because it measures how much profit you are actually making. Learn to prepare a  cash flow statement here.

Scalefactor Cash Flow Transaction
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Benefits of Cash Flow Statements

Utilizing your business’ cash flow statement helps you better measure your success and is one of the most transparent indicators of your business’ profitability. If the cash flow statement indicates a positive cash flow, investors will see more value in your business. When you are in control of your cash flow and your cash flow statements reflect that, you demonstrate a strong business acumen which appeals to both your shareholders and customers.

Cash flow statements may pinpoint trends and differences that are not readily seen in your day-to-day functions. That is why it is important to know your cash flow and monitor it at all times.

Know Your Cash Flow Statement

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Cash Flow from Operating Activities

Operating activities may be the most important component to consider when evaluating your cash flow because it determines the health of your business’ functions. Looking at your business’ net income in comparison to your operations spending helps you better understand how efficiently you are running your business. Operating activities include the cash flow of incoming revenue and the costs of your product.

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Cash Flow from Investing Activities

Investing activities are also an important factor in determining your cash flow and can help offset your operations costs. Investing activities include your investment and selling of assets, and capital expenses such as property and equipment. If your asset purchases report a consistent negative cash flow, that often means your business is growing. If you are selling assets, that will report a positive cash flow.

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Cash Flow from Financing Activities

Financing activities also can help offset your operations costs. In a cash flow statement, financing activities evaluate the difference between receiving money from investors and returning money to investors. Sometimes smaller businesses do not have a need to look at financing activities because they do not have debt or dividends. Financing activities include the issuance or repurchase of stock, repayment of debt and payment of dividends.

Cash Flow Statement Example

Preparing a cash flow statement can be difficult, but it’s simplified when working with clean and accurate data. Here’s an example of what a cash flow statement might look like and the sections it should include.

Scalefactor cash flow example

Cash Flow Management Simplified

It’s important to check your cash flow statements consistently in order to have total financial control and meet your business goals. If you would like to learn how to better manage your cash flow, consider using a service like ScaleFactor. We offer tools to facilitate and simplify your cash, invoicing, and bill pay needs:

Smart Bill Pay

Keep tabs on your cash flow activities with ScaleFactor’s smart bill pay. You can easily upload, manage and pay your bills at a click of a button. Additionally, you can set up automated bill pay which will help you always be on schedule and free up your time to focus elsewhere!

Invoice Management

Enhance your cash flow visibility with ScaleFactor’s invoice management. It’s easy to see your upcoming invoice due dates, and updates your financial data in real-time. Bonus: you can send automatic reminders to your clients to make invoicing fast, easy and painless.

Expense and Business Insights

Use expense and business insights to help you better manage your cash flow. Our expense and business insights are catered to your business to show the information that is important to you.

Prioritize and simplify your financial tracking process. Request a ScaleFactor demo to see how you can better manage your cash flow!