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The last and final step in forecasting and budgeting mini-series is developing a cash flow statement to accompany your budget. A simple cash flow statement is helpful in highlighting any potential challenges from the necessary cash purchases or servicing the new debt associated with the asset purchases. The cash flow takes into account your budgeted revenues/sales, fixed and variable expenses, and new purchases throughout a 12-month timeline (the upcoming fiscal year that you are budgeting for).

Use Excel to create a simple cash flow statement:

  1. Start with an opening balance (cash available)
  2. Add your revenue projections for the month
  3. Add or deduct any cash increases or decreases from investing activities (if applicable)
  4. Deduct any cash expenses for the month which will leave you with your bank closing balance

This closing balance becomes your proceeding month opening balance. If you lay this out in excel, you will immediately see any cash flow concerns (negative cash balance) which you can address before it becomes a problem.

A cash flow statement is typically defined as the breakdown of operating, investing, and financing activities. However, for the intents and purposes of your budgeting, understanding the incoming and outgoing cash from your operating activities will provide you with the information required to validate your budget and adjust your spending activities for the year.


A basic cash flow statement can help visualize cash requirements for the upcoming 12 months.

In summary:

  1. Use Excel to create a simple cash flow statement to estimate cash requirements
  2. Include all cash activities including revenue, expenses, asset purchases (debt), or cash purchases
  3. Include any investment income or expenditures that would affect available cash
  4. Use these figures to create a rolling cash balance for the beginning of each month and adjust the budget as required.


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