What is a cash flow statement?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
A cash flow statement tracks the money coming into and going out of a business over a period. It starts with an opening balance, adds cash received, takes away cash paid out and ends with a closing balance, so it shows whether the business can meet its payments.
Filled in with actual figures, it shows what happened. Filled in with estimates for future months, it becomes a cash flow forecast, which warns of a shortfall before it happens.
Cash flow differs from profit because it follows when money actually moves, not when income is earned or costs are incurred.
In Australia
business.gov.au publishes a free cash flow statement template. Each month starts from the opening balance, which is the bank balance in the first month and the previous month's closing balance after that, adds cash incoming such as sales and debtor receipts, takes away cash outgoing such as purchases, rent and utilities, and works out the closing balance.
It suggests updating the statement regularly to spot payment cycles and seasonal trends, so you can prepare for busy times and plan for quiet periods.
Worked example
| Item | Amount (AUD) |
|---|---|
| Opening balance | 5,000.00 |
| Total incoming | 14,200.00 |
| Total outgoing | 15,600.00 |
| Monthly cash balance | -1,400.00 |
| Closing balance | 3,600.00 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Forecasting sales income in the month it is invoiced rather than the month customers usually pay.
- Leaving out irregular payments, such as annual insurance or loan repayments.
Related terms
Sources
- Set up a cash flow statement
business.gov.au, Australian Government. Current at 15 October 2026, released 22 May 2025. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Guide to managing cash flow
business.gov.au, Australian Government. Current at 15 October 2026, released 22 December 2025. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.