Tax Advice Series: Part Two

Cash Flow Statements

A cash flow statement is a financial document that tracks the sources and uses of a business' cash over a certain period of time. It helps to identify the inflows and outflows of cash that are taking place in a business and can be used to help make financial decisions.

Cash flow statements provide information about a business’ cash inflows, such as revenue from sales, income from investments, and loan payments. It also provides information about cash outflows, such as payments to suppliers, wages, and taxes. By looking at a cash flow statement, business owners can get an understanding of how much money is coming in and out of the business and where the money is going.

Business owners can use cash flow statements to better manage their cash and identify ways to generate additional cash flow. Some ways to generate additional cash flow include implementing cost cutting measures, negotiating better payment terms with suppliers, offering discounts to customers, and increasing sales. It is also important to regularly review cash flow statements to ensure that cash is being managed efficiently and that any potential cash flow issues are addressed quickly.

Business owners who want to make the most of their cash flow statements should consider contacting a financial specialist to learn more. An expert in the field can provide valuable insight and advice on how to maximize the use of cash flow statements. A specialist can help business owners identify potential areas of improvement, find ways to make the most of their cash flow statements, and provide guidance on how to make the best decisions for the business in the long-term. With the right guidance and advice, business owners can use cash flow statements to make the most of their finances.

Thank you to Timothy Okeowo, MBA, EA from Victory Tax & Accounting Services