How to complete a Cash Flow Statement

This form shows your business's actual cash inflows and outflows over a specific period, proving to lenders you generate enough liquidity to service debt. Banks require it alongside your balance sheet and income statement to assess real cash-generating ability, not just accounting profits.

- Your completed balance sheet for the beginning and end of the reporting period - Your income statement (profit and loss) for the same period - Bank statements showing actual deposits and withdrawals for all business accounts - Records of any loan payments, equipment purchases, owner draws, or capital contributions during the period - Decision on whether you will use the direct method (showing actual cash receipts and payments) or indirect method (starting with net income and adjusting for non-cash items) - Your chosen governing state selected in the form header before submission

1. Select your reporting period and choose direct or indirect method. Most small businesses use indirect because it reconciles directly to your income statement. 2. If using indirect method, enter net income from your income statement as the starting point in the Operating Activities section. 3. Add back non-cash expenses like depreciation and amortization, then adjust for changes in working capital accounts—increases in accounts receivable and inventory reduce cash, while increases in accounts payable add cash. 4. Calculate your total cash from operating activities. This auto-totals in most templates and is the most important number lenders review. 5. Move to Investing Activities and enter cash spent on equipment, property, or other capital assets as negative numbers, and any proceeds from asset sales as positive. 6. In Financing Activities, record loan proceeds as positive cash inflows, loan principal payments as negative outflows, plus any owner contributions (positive) or distributions (negative). 7. Sum all three section totals to calculate net increase or decrease in cash for the period. 8. Add your beginning cash balance and verify the ending cash balance matches what appears on your period-end balance sheet and bank statements. 9. Attach bank statements as supporting documentation before submitting to your lender.

- Banks focus most on operating cash flow—if this number is consistently negative, you are burning cash and represent higher credit risk, even if you show accounting profit. - Cross-check your ending cash balance against your balance sheet and actual bank balances; mismatches signal poor controls or accounting errors that delay loan approval. - Avoid lumping multiple transactions into single line items; lenders want to see discrete cash movements for major investing and financing events.