Understanding A Cash Flow Statement
What is a Cash Flow Statement?
A Cash Flow Statement is a financial statement that tracks the movement of a company’s cash over a selected period of time. This is an all-inclusive statement because it includes the inflow and outflow of cash made by the business through operations, investments, and financing activities. It is an indicator of good health when cash inflow exceeds cash outflow. It is generally presented alongside other financial statements such as the Profit and Loss Statement, Balance Sheet and Budget.
Why is a Cash Flow Statement?
Maintaining a Cash Flow Statement is important because it allows you to project any cash flow issues down the line or can help you strategize how to best use any cash reserve. For example, as an artist you may confirm an engagement a year ahead of the actual engagement. Leading up to the event, you may need to pay for some expenses up front. This could cause cash flow issues if you have not properly prepared for the upfront costs. Using a Cash Flow Statement and knowing this information at the start will allow you to better negotiate, maintain successful relationships, and overall run a more financially healthy business.
What do I need in order to put together a Cash Flow Statement?
Pentacle has provided a Cash Flow statement template that artists can use if they don’t have an accounting software such as QuickBooks. This formulated template is ideal for individual artists looking for a way to organize their cash flow on a monthly basis. It’s important to remember that a Cash Flow Statement works best when used alongside other financial statements such as a Profit and Loss Statement and a Budget. To access the Cash Flow Statement, connect with us via Live Chat and say “Cash Flow Template” to access today!
Pentacle remains dedicated to continuing to provide a high level of support to artists during these extraordinary circumstances. Alongside many other key and respected organizations in the field, we have begun accumulating and curating resources for artists and organizations experiencing income loss and other troubles as a result of the COVID-19 crisis. Find our list of resources here.
NEXTSTEPS | 01.21.22
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