How to Write a Cash Flow Statement for Your Small Business

One of the financial documents that you need when filling out a loan application (whether with Honeycomb or with a traditional lender like a bank) is the cash flow statement. In addition to the balance sheet and the profit and loss statement, these items help the lenders understand your business’s financial situation and whether you’d be a good fit to lend to, or to run a regulation crowdfunding campaign. Read on to learn what a cash flow statement is and how you can write one.

What is a Cash Flow Statement?

To put it simply, a cash flow statement shows how cash moves in and out of your business. This is different from your balance sheet or your profit and loss statement in that we’re focusing on how cash is used in the business. It’s important to lenders because it shows how your business operates and invests its cash.

How to Write a Cash Flow Statement for Your Small Business

Writing a cash flow statement is pretty straightforward and something you can do on your own, or with the help of a bookkeeper. If you choose to do it on your own, you can download some templates for this and the other statements here - and here are the steps:

Start with your net profit

You start your cash flow statement with the net profit of your cash and cash equivalents. If you’ve got your income statement handy, it should be easy to find this number!

Determine your cash flows from operating activities

Next, we want to see how cash moves in and out of your business’s operations. This is your net cash from operating your business. From your net income, add back non-cash expenses such as depreciation and amortization. From here, you should adjust for net working capital.

Determine your cash flows from investment activities

If you’re putting out cash for major investments such as purchasing property or equipment, this is where you would note that down. If you’ve sold assets, this would count as an inflow of cash into your business. This does not include debt.

Determine your cash flows from financing activities

This is where you add back any debt or equity investment activities you’re running for your business. For example, if you get a Honeycomb loan, that would show up as an inflow of cash into your business, and as you pay it off, it would show up as an outflow. Whether it’s debt payments you’re paying back, or investments you’re receiving from lenders, or interest payments.

Calculate your ending balance

Now that you know your starting balance and your cash flows, finding your ending balance is as simple as summing up your net income plus the cash flows from the operating, investing and financing activities. You can then determine the net cash flow by comparing your starting balance to your ending balance. A negative net cash flow means your business spent more than it earned, and a positive net cash flow means that your business made money.

Get prepared for your business’s growth with just a few simple steps.

If you need templates for your cash flow statements, profit and loss statements, or balance sheets, we’ve got you covered. Having these documents at hand will help you glide through the application process for any loan you choose to pursue - plus they’re great for you to get an understanding of your own business’s financial health. However, you can always use a bit of help, which is why we’re happy to connect you with small business bookkeepers who can help you out at an affordable rate.

To learn more about running a Honeycomb loan crowdfunding campaign, fill out the form below!