(Free Template) The Month End Close Process And Cash Flow

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Many business owners have either bookkeepers or staff accountants to handle the month end close process. Honestly, it’s not a savory activity if you are not used to dealing with numbers.

Most business owners I know do not get involved much in the accounting practices of their businesses. What can occur is a gap in knowing some of the more important financial decisions that need to be made.

This can affect the solvency of a business if you are not part of the reporting process.

Each month, at the close of each monthly reporting activity, many of the bookkeepers end up making their final entries and run their normal reports. 

Not all business owners have accounting help though. So I thought I would help with this article.

I am going to offer a “how-to” article for small business owners on how to fill out a cash flow statement along with an optional template of a cash flow statement to get you started. 

How cash flow statements are critical at the month end close process

Aside from the income statement and balance sheet, where each of these reports indicate the financial standing of a company, the cash flow statement is used to identify how the money moves in and out of company during an indicated reporting period.

There are 6 components of the cash flow statement you are going to need to understand a little more in depth. These are:

  • Cash Balance
  • Operations
  • Investing
  • Finance
  • New Cash Balance



Cash Balance

You are going to want to get this number at the start of the accounting period, whatever that period is based on the accounting method you are using. 

This figure will appear at the end of the previous Cash Flow Statement or from the balance sheet. 

For each of the following categories, you will need to record the income and payments that apply to each either as a positive number (inflows) or as a negative number (outflows). 


In this section, the activities represented are those that are associated with the cost of selling a product or services for your company. This is the company’s income, which is calculated in the Income Statement) as well as some of these other considerations, like:

  • Cash from continuing operations
  • Changes in accounts receivable
  • Depreciation and Amortization
  • Income Taxes Paid


These activities are the buying and selling of assets and/or securities that are not tied to the inventory. Such items include long-term assets like property, investments, stocks, equipment, and loan payments. More often than not, this section is usually a negative number since it allocates cash disbursements into various assets and investments. 


Financing activities can be described as borrowing money, repaying any debts, purchasing stock/equity, or handing out dividend payments. 

New Cash Balance

To arrive at this figure, add up the inflows and the outflows in the operating, investing, and finance activities in their respective columns.

Then add those three values together and subtract the balance from the previous statement’s cash balance to arrive at the net increase in cash.

If you need more tips on calculating cash flow on a daily, weekly, or monthly basis click here. 


Analyzing the cash flow in a business, even though it reports the value of a company, may not accurately paint a picture of financial health.

If a company can rely on future revenue earnings, it can continue to operate with debt or accounts receivables. 

Companies can be worth a lot on paper but if the inflows of cash are unpredictable, there is plenty of reason for concern. 


This cash flow statement template can be downloaded and used by any type of business. It should be customized to include the specific types of cash flow activities that apply to your company. To fill out this spreadsheet, enter the applicable values in their respective cells. The total amounts will automatically populate based on the embedded formulas. An example cash flow statement is also included to help guide you through the process. 


Most small businesses will at some point rely heavily on accurate cash flow analysis. Your month end close process adds value to the facts and figures one can report accurately on the Cash Flow Statement. In order to continue to pay suppliers and employees on time or secure needed capital for necessary expansion, cash flow analysis and accurate reports are crucial. 

If you need any assistance with your financial reporting activities such as bookkeeping or accounting and need to schedule a consultation with us, please visit our site pages for Outsource Bookkeeping or Financial Reporting Services for more information.



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