As I mentioned earlier, the cash flow report is a very important report that every business owner or entrepreneur should be able to analyze in order to plan their next move in the business. Almost all business and academic gurus emphasize the importance of preparing a cash flow report, but unfortunately none of them provide specific guidelines on how to prepare it. The cash flow report we are mentioning here is a dynamic cash flow report which will show us the cash position at any time and at the same time it can act as a powerful tool that allows us to earn as much money as we can by investing. . the excess fund in a very short-term investment such as a money market placement. Cash Flow Statement that every accounting textbook recommends is a cash flow report generated from the Balance Sheet and Profit and Loss Statement and will provide an in-depth analysis of the recorded net cash flow from operating activities, from investment or financial

First, if we only have one bank, the opening balance of our cash position for that month should be the closing balance of the previous month. This can be derived from the Balance section in the current asset which will indicate the closing balance of the previous month’s bank balance. If for some reason the company cannot produce your company account such as P&L and Balance Sheet due to the size of your company, you can get the closing balance from your cash book as this is the basic information you need to prepare if They have not yet implemented the accounting system of their business.

If you only have one bank for your business, it is a good idea to prepare your payment according to the payment categories on your cash flow statement. For example, if you have decided that your payment categories are for payment of taxes, utility bills, subcontractors, vendors, petty cash, and others, you should collect all your invoices and invoices under their respective categories. Once you start to prepare your payment, you must write the checks according to their serial number. For example, if your check starts with the number 000001 and you intend to prepare 20 checks to pay vendors, the serial number of the prepared checks should be from 000001 to 000020. Later, if you want to prepare 10 checks for subcontractors, the serial numbers should be from 000021 to 000030. You can also continue using the same technique for other payments. Whether you prepare the payment manually or by using a special paper check, you must follow the same technique.

The same concept applies when we receive incoming checks from your customers and clients. Following the same technique, if you have some important clients that normally account for almost 80% of your revenue, it is highly recommended to classify all important clients into their revenue categories. Other income which normally consists of around 20% of your income, you can simply specify it in other categories.