Profit alone doesn’t tell the full story. You might be earning well on paper, but still run short when bills, taxes, or unexpected expenses arrive. Your cashflow statement shows the real movement of money in and out, giving you control and clarity.
What a cashflow statement shows
Think of your cashflow statement as a map for your money – it shows where cash is coming in, where it could get held up, and helps you plan your next financial moves with confidence.
- Operating cashflow: Day-to-day money in and out – client payments, supplier bills, wages. Knowing this shows if you can cover regular costs each month.
- Investing cashflow: Money spent on or received from assets, like equipment, vehicles, or property improvements. This shows whether you can invest without risking daily operations.
- Financing cashflow: Loans, repayments, or owner drawings. This highlights how borrowing or withdrawals affect your cash position.
Unlike a profit and loss account, which includes sales and bills whether or not money has actually moved, cashflow shows the cash you truly have in the bank – the figure that keeps your business running.
How to use it to your advantage
Avoid surprises: Spot gaps before bills bounce. For example:
- Holiday let owners can see if there’s enough cash for unexpected maintenance.
- Builders can ensure they have funds to pay suppliers even if a client invoice is delayed.
- Therapists or coaches can plan for quieter weeks between sessions.
Plan with confidence: Know if you can hire, invest in equipment, or make property improvements while keeping your cash position secure.
Stay in control: Compare your actual cash to projections weekly. Understand how decisions – like taking on a project or offering payment terms – impact your available cash.
Prepare for quieter periods: Forecasting cash helps you navigate off-season months, gaps in projects, or delayed client payments.
Practical steps to get started
- Keep your accounts up to date.
- Set up bank feeds to automatically track transactions.
- Send reminders for client payments.
Doing this ensures you always know how much cash is on hand, so you can make decisions confidently – whether that’s taking on a new project, investing in property maintenance, or planning for quieter months.
Bookkeeping that keeps you in control
Accounting software can generate reports, but only accurate bookkeeping ensures the numbers reflect reality. By keeping income, expenses, and bank activity current, you get a true picture of your cash position. That clarity lets you act with confidence and reduces the stress of “what if” scenarios.
Want to see your cashflow clearly and plan with certainty? Book a consultation and let’s create a system that works for your business.
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