So when cash flows into your business—whether in the form of sales, loans, or investor money—some of it will flow out. It might end up in employee paychecks, building maintenance costs, or rent payments, and it’s up to you to track how much comes in and where it goes.
That’s where cash flow statements come in.
A cash flow statement details all your sources of cash, including sales and shareholder investments. It also breaks down where that money goes so you can see if your business is making more money than it spends.
Your cash flow statement is one of your business’s most important financial documents. Along with your profit and loss statement and balance sheet, it shows whether your business is on the path to success, and if not, how you can get back on track.