Business Plan Cash-Flow Statement: Total Funds In

An important part of your business plan, the cash-flow statement tracks every single dollar as it comes into your company — and not a second before. You can’t show the revenue on sales, for example, until you actually have the payment in hand. Following are the income sources that the cash-flow statement tracks:

• Receipts on sales: The money you take in from the sales of your products or services shows up in this section, but only after it’s deposited in the bank. Billing a customer may be enough to generate a revenue entry on your income statement, but you can’t include the amount on your cash-flow statement until you have a deposit slip to show for it.

• Dividend and interest income: Any interest you make on your business bank accounts or any earnings from your investment portfolio appear in this section — if the payments come in during the statement period.

• Invested capital: If your company receives funding from investors, on the date the money reaches your business, it’s entered here on your cash-flow statement.

The Broad Street Emporium cash-flow statement in the figure shows that the gift store took in $740,000 cash last year. That number synchs with entries on the company’s income statement and balance sheet.

Here’s how it works: The income statement shows gross income of $729,000 and income from dividends and interest of $3,000. Plus, the balance sheet shows that the company also received $5,000 of investment capital from its owners. (This money is reflected in the entry for invested capital, which went from $195,000 the previous year to $200,000 last year.) Additionally, the company collected $3,000 in outstanding accounts receivable last year (shown on the balance sheet as a reduction in accounts receivable from $18,000 to $15,000). Together, these funds total $740,000, exactly as indicated by the cash-flow statement. Ta-da!