A company’s cash flow report shows its spending expenses called as outflows and income sources or inflows. This money statement is used by some companies to predict future revenue and determine how profitable their operations are.
THREE CASH ACTIVITIES CATEGORIES
There are three types of cash flow statements for any type of company or business:
- Operating – The money the company receives or pays for its regular business activities such as sales and purchases and amortization.
- Finance – The movement of funds around the company, its owners, investors and creditors.
- Investing – is the act of investing money in capital assets such as factories, buildings and land.
Small business accounting software are now being used to identify the relationships between items and category. These relationships are quantified using ratios and indicators that help to evaluate business performance. With the help of these categories, any company can monitor the money flow of their business.
CASH FLOW SOFTWARE
A small business bookkeeping software which can provide accurate cash flow analysis and support for the current global pandemic is crucial for companies to continue running. An application that accurately and fairly represents financial activity is essential in today’s market. This can be used to predict future revenues and create budget plans that will help companies in times of market slowdown. As most businesses and companies have moved to online operations and work remotely, it is easy to create cash flow statements from your computer. This also meets the new pandemic protocols. Accounting software allows you to store and verify money transactions and provides accuracy, even though it might seem strange.
To know more about cash flow analysis and how a small business should do it, you can read this infographic from Kippin It Simple.