Cash flow is a financial term that describes the amount of money coming into and going out of your business. A cash flow statement gives a summary of this.
Why it's important
A cash flow statement can help you keep track of your money. Making sure you have enough cash to pay for things such as staff, materials and other bills is an important part of running a business.
If you don't pay your bills then your suppliers may take legal action.
Doing a cash flow statement will help you understand your financial situation and can be used for budgeting.
Cash flow versus profit
Cash flow and profit are different things. Cash flow shows the amount of money coming in and out of a business. Profit is the amount of income remaining after all expenses have been paid.
Even profitable businesses can get into trouble if they don't have enough cash available to pay bills.
How to do a cash flow statement
Get a template and outline on the Australian Government's Business website.