Your cash flow is the third and final document that completes your financial puzzle. Simply put, the cash flow statement reports the cash generated and consumed during the specified month. The cash flow is different from the P&L (profit and loss or income statement) because the P&L is prepared using accrual accounting and therefore the revenue shown may not have been collected (and therefore will not show on the cash flow statement).
Your cash flow statement allows you to see the cash flowing in and out of your company and determines your ability pay bills and keep your company afloat. Used with your income statement, it offers a way to analyze and compare if your net income is being collected or continues to be outstanding.
Why do I need a CFO?
You didn’t start your business or become the head of an organization because you are a financial expert. You are there to grow and succeed. The accounting, bookkeeping and financial aspects of your business are important to how you run your company, but it is time consuming and if not done properly, can lead to more headaches down the road.
Keeping track of your bookkeeping and your financial statements is time consuming and difficult to manage. But most frustrating is understanding and interpreting your financial picture from reports. CFOs are responsible for timely and accurate presentations and financial reports in order to capitalize on your growth. Find out more about our CFO services here.