Sometimes in business the movement of cash can get quite confusing… The bank balance looks OK but you’re never really sure how much of it is yours. There’s taxes to pay, outstanding supplier invoices and monthly charges.
You need to know: The correct opening bank balance. This isn’t just the balance that’s on your bank statement, but the reconciled balance, which takes into account any unpresented transactions, such as transfers in and out that haven’t hit your…
Cash Flow is the term used to describe the activity of cash moving in and out of the business. For example cash coming in from sales, loans, interest etc. and cash going out e.g. expenses, taxes, dividends etc.
Usually it’s done on a monthly basis i.e. you note the opening bank balance at the start of the month, plus cash coming in, less cash going out and the resulting bank balance at the end of the month.
As explained in the question above, cash moves into and out of the business at various times. A Cash Flow Forecast is a report that lays out when cash will come into and out of the business.