Toolkit: Monitoring and Projecting Cash Flow
This toolkit presents a sample cash flow statement for a savings institution.
The cash flow statement reports the cash inflows and outflows of an institution during a set period. The cash flow statement also explains the causes of any changes in the cash balance. The purpose of the cash flow statement is to:
- Present all cash inflows and outflows for a given period;
- Serve as a tool to estimate future cash flow;
- Reveal the impact of management decisions;
- Determine capacity to pay dividends and/or interest on shares, and the interest and principal on loans payable;
- Disclose profit relationships as changes occur in the cash balance.
Projected cash flow reports give an account of the expected cash inflows and cash outflows of an institution during a future period. Projected cash flow reports are used to determine if there will be sufficient liquidity to cover financial costs, personnel expenses, marketing expenses, legal fees, administrative expenses, disbursements of new loans, savings withdrawals, share contributions, loans payable, and creditors as well as the need for external financing.
