A cash flow statement shows the money going into and coming out of your business. Every business should have a cash flow statement projecting 12 months out. However, in some cases you may also need a 3-year cash flow statement.
What’s in a 3-Year Cash Flow Statement?
This 3-year cash flow statement includes detailed cash flow projections and a Summary View page that sums up total cash in and cash out for each month. It’s easy to modify the template to fit your business needs.
The 3-year cash flow statement includes:
- Cash received. This may include income from sales, loan proceeds, or interest income. If your business is a startup and has already made some sales or received orders, you can estimate when you will actually get paid.
- Cash paid out. This may include inventory and other purchases, payroll, rent, utilities, taxes, loan payments, and more.
How to Use a 3-Year Cash Flow Statement
The 12-month cash flow statement is a useful tool for managing your business’s budget on an ongoing basis. If you’re writing a business plan, seeking financing or otherwise doing long-term planning, you’ll want to create a 3-year cash flow statement to help you make projections.
You can use this 3-year cash flow template to test various "what if" scenarios. How will an increase or decrease in sales affect your cash flow? How will hiring employees affect your cash flow? What expenses can you reduce to free up more cash?
By using the 3-year cash flow statement to project cash flow going forward, you can identify times when cash is likely to be low. This will help you figure out how much money you need to seek from lenders or investors to maintain positive cash flow while still achieving your business goals.
You can learn more about how to manage cash flow in SCORE’s free webinar “Mastering Control of Your Cash Flow.”
Do you need help creating or fine-tuning your 3-year cash flow statement? Connect with a SCORE mentor online or in your community to get free, personalized advice.