Your cash flow statement shows you the amount of money your business receives and spends during a period of time. Keeping track of your income and expenses is necessary to make sure that you have enough money to keep your business running, during the good times and the bad.
This data shows you how much money you have on hand, excluding any credit that is owed but hasn’t been paid to you yet. Long term, you can use this information to predict potential decreases in your cash flow and plan accordingly so that it doesn’t affect your business on a large scale.
Cash Flow Runaway
Starting your own business can be financially straining and there will be some months that are more cash dependent than others. Especially when starting out, there may be times when you are spending more than you are making. In order to properly plan for the future, it is important to know how long you can keep doing this before your finances are in trouble.
Revenue Growth Rate
Revenue is the amount of money you bring in, which is important. However, what is also important, is predicting how that money compares annually. Did your revenue grow? Did it decrease? Having a record of these numbers over time shows business owners a big picture and helps with forecasting and making critical decisions, such as deciding whether or not to hire or how much to budget for other costs.
It is important for any business owner to have at least a basic understanding of how these tools work, but we also know that the process of learning is often tedious and time-consuming. At Bakersmith Bookkeeping Group, our team of dedicated bookkeepers and accountants manage your finances so you can focus on what is most important, your business. To learn more about our services, call (303)-792-0655.