Cash flow shows the movement of cash into your business. So, monitoring cash is vital for a successful business. A cash flow statement shows date, income, expenses, opening balance and the closing balance. The closing balance becomes the opening balance for the next financial year.

1. Cash flow management
Cash flow forecast deals with the transaction at the time of payments and receipts. If a sale is
taking place that does not mean the cash flow will get affected as it could be a credit sale.
You might make a credit sale in a month that depends on your credit agreements with your
customer. That the payment for that sale might receive after three months, then there will be
an effect on your cash flow. Once you prepare a budget depending on your profit and loss
account, it is essential to ensure you review your cash flow. To see the financial situation and
also the business is possible.
Cash flow forecast
A cash flow forecast is the flow and movements of cash into the business. A lender will insist
on seeing a well-prepared cash flow forecast. Most banks will supply a cash flow format to
the people who are not familiar with the cash flow forecast. As with the budget, a month to
month cash flow forecast is essential to make a comparison with the budget as well. Helps to
make sure that you receive the cash for the sales in a particular month matches with the
budgeted figure. It enables to see the more delicate details of the flow of money to make
plans. Depending on your business might be able to produce a cash flow forecast for a more
extended period than the average annual forecasting. That said the question of accuracy
would be there.
Constructing a cash flow forecast.

2. An average yearly cash flow consists of the following
 Date
 Receipts
 Payments
 Opening balance
 Closing balance
The closing balance for a period will be the opening balance for the following period.
The income in your cash flow could include the following
 Cash sales
 Debtors
 Other income.
Cash sales
It is the amount of cash that you receive when you sell a product or service. In a retail
business where only have cash sales, it is easy to create the cash flow forecast if the budget
appropriately is done. For example, if the budgeted sales for a month is $25,000 so the cash
flow forecast should say the same amount.
Debtors
It is credit sale the customer pays within a specified period, but that should be within the cash
flow forecast period. If not you cannot include that as your debtors in your present cash flow
forecast. So that depends on your credit agreements with your customers, but some might not
keep that date of payment. Therefore, it is essential that you monitor your cash flow monthly
to make it accurate.
Other income.

3. Here again, depends on the type of business as you might get unexpected income during your
cash flow forecast period. For example, if you are making VAT payments, you might get a
refund for a previous period. Maybe some income from other investments that you made for
your company. In this way, you cannot ignore the fact that you might receive an unexpected
salary from various sources.