A Statement Of Cash Flows Reports On A Business Cash Management – How to Prepare a Daily Cash Position Report – Part 1

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Cash Management – How to Prepare a Daily Cash Position Report – Part 1

As I mentioned earlier, the cash flow report is a very important report that every business owner or entrepreneur needs to analyze so that they can plan for the next step in their business. Almost all business gurus and academics stress the importance of preparing cash flow statements but unfortunately none of them provide specific guidelines on how to prepare them. The cash flow report that we have mentioned here is a dynamic cash flow report where it will show us the cash position at any point of time and at the same time can act as a powerful tool to enable us to earn maximum money by investing. Additional funds in short-term investments such as money market placements. The cash flow statement that every accounting textbook recommends is a cash flow statement derived from the balance sheet and profit and loss account and will provide an in-depth analysis of the recorded net cash flows from operating, investing, or financing activities.

Firstly, if we have only one bank, the opening balance for our cash position for that month must be the closing balance of the previous month. This can be obtained from the balance sheet section under current assets which will show the closing balance of the bank balance for the previous month. If for any reason an enterprise is unable to prepare their company accounts such as P&L and Balance Sheet due to the size of their company, they can get the closing balance from their cash book as this is the basic information they need to prepare. Not yet set up an accounting system for their business.

If you have a single bank for your business, it is advisable to structure your payments by category payable in your cash flow statement. For example, if you’ve determined that your payment categories are taxes, utility bills, subcontractors, suppliers, petty cash, and others, you should group all of your receipts and bills by their respective categories. Once you start making your payments, you should write the checks in their serial numbers. For example, if your check number starts with 000001 and you want to generate 20 pieces of checks for supplier payments, then the generated checks must have serial numbers from 000001 to 000020. Then, if you want to produce 10 pieces of checks, the subcontractors should have serial numbers from 000021 to 000030. You can continue to use the same technique for other payments as well. Whether you prepare the payment manually or using a specially printed check, you should follow the same technique.

The same concept applies when we receive checks from your clients and customers. Following the same technique, if you have a few key clients that typically account for 80% of your revenue, you are advised to categorize all key clients into your income categories. Other income which is usually around 20% of your income, you can just specify them in other categories.

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