Statement of Cash Flows

Few people who use MYOB accounting software, benefit from this report. It is probably the most misunderstood reports but it is one of the most useful. Why is this?

While profit is the name of the game, profits alone don’t guarantee success of a business. You can be profitable and growing as fast as Auckland’s house prices and still fail. Countless businesses go into bankruptcy while they still make profits… quite simply, they run out of cash.

A Statement of Cash Flows gives you the following:

Opening Bank Balances (Begining of month – all bank accounts)
Cash Receipts & disbursements are divided up into 3 categories:

• Operating activities (ie day to day trading)
• Investing activities (eg buying/selling fixed assets)
• Financing activities (eg taking out/paying off loans, owner investing/drawing capital from business)

Within each category you can see whether the asset, liability or equity account has gone up or down to give you more or less cash on hand.

Closing Bank Balances (End of month – all bank accounts)
While this is a historical look of what has happened, the business owner can clearly see how the money was spent and why they have less or more cash in the bank.