Money flowing in and out of your business tells a story—a story that can mean the difference between growth and bankruptcy. This story is formalized as the cash flow statement, one of the most practical yet often misunderstood financial documents in business.
I’ve noticed that many small business owners approach cash flow statements with either confusion or dread. They’re seen as complex documents meant only for financial experts. But here’s the truth: understanding who prepares these statements—and why—can transform how you run your business.
What Is a Cash Flow Statement, Really?
Before we talk about who prepares it, let’s be clear about what we’re discussing.
A cash flow statement tracks the actual money moving through your business during a specific period. Unlike an income statement that might include sales made on credit, the cash flow statement only cares about real cash exchanges.
It breaks down money movement into three categories:
- Operating activities: The cash generated from your core business operations
- Investing activities: Cash used for or generated from investments
- Financing activities: Money related to debt, equity, and dividends
What makes this statement so valuable is that it reveals your business’s ability to generate cash to fund operations and growth. You might be profitable on paper but struggling with cash—a situation that kills otherwise promising businesses.
The Cast of Characters: Who Actually Prepares Cash Flow Statements?
In Small Businesses: Often, It’s You
If you run a small business without a dedicated finance department, you might be the one preparing the cash flow statement, perhaps with software help. Many business owners work with bookkeeping software like QuickBooks or Xero that can generate basic cash flow statements automatically.
This isn’t necessarily a bad thing. Being hands-on with your cash flow gives you intimate knowledge of your business’s financial health. However, as your business grows, this responsibility typically shifts.
The Finance Team: Your Business’s Financial Storytellers
In mid-sized businesses, the responsibility usually falls to:
- Bookkeepers: They record the daily transactions that form the raw data
- Staff Accountants: They organize this data into the statement format
- Financial Analysts: They may interpret the cash flow patterns
- Controllers: They ensure accuracy and compliance with accounting standards
The Executive Oversight: CFO’s Role
In larger organizations, the Chief Financial Officer ultimately owns the cash flow statement. They:
- Oversee the entire preparation process
- Review the final document
- Present cash flow insights to the CEO, board, and investors
- Use the data to inform strategic financial decisions
The CFO doesn’t typically prepare the statement themselves, but they are accountable for its accuracy and what it reveals about the company’s financial health.
External Professionals: When Outsiders Step In
Sometimes, preparation involves people outside your company:
- External Accountants: Many small businesses outsource their bookkeeping and financial statement preparation to accounting firms
- CPAs: Certified Public Accountants often help prepare financial statements for tax purposes or when specialized expertise is needed
- Auditors: While they don’t typically prepare the statements, they review them for accuracy and compliance
- Financial Consultants: They might prepare or review statements during major transitions or fundraising rounds
When Does This All Happen?
The timing of cash flow statement preparation follows specific rhythms:
Regular Reporting Cycles
Most businesses prepare cash flow statements on a regular schedule:
- Monthly: For internal management decisions
- Quarterly: For board meetings and potential investor updates
- Annually: For tax purposes and year-end financial reporting
Special Occasions
Beyond regular cycles, cash flow statements might be prepared:
- Before applying for loans or lines of credit
- When seeking investment capital
- As part of due diligence during mergers or acquisitions
- Before making major capital expenditure decisions
- During financial restructuring or turnaround situations
Why Should You Care About Who Prepares It?
The person preparing your cash flow statement significantly influences its usefulness. Here’s why:
- Accuracy depends on expertise: Properly categorizing cash movements requires accounting knowledge
- Different perspectives yield different insights: A CFO might see strategic implications that a bookkeeper might miss
- The preparer affects timing: In-house teams can provide more frequent updates than external accountants
- Your level of involvement matters: As an owner, your understanding improves when you’re part of the process
The Preparation Process: What Actually Happens
The cash flow statement doesn’t appear by magic. Here’s a simplified view of the preparation process:
- Gathering data: Collecting bank statements, transaction records, and account information
- Categorizing transactions: Sorting cash movements into operating, investing, and financing categories
- Reconciling accounts: Ensuring all cash is accounted for properly
- Formatting the statement: Organizing the information according to accounting standards
- Review and analysis: Looking for patterns, problems, and opportunities
Software has simplified many of these steps, but human judgment remains essential, especially for complex businesses with multiple revenue streams or intricate financing arrangements.
For Small Business Owners: Practical Takeaways
If you’re running a small business, here’s what you should do:
- Know your options: Decide whether to prepare statements yourself, hire staff, or outsource
- Invest in good tools: Use accounting software that can generate cash flow statements automatically
- Develop basic skills: Learn to read and interpret cash flow statements, even if you don’t prepare them
- Establish a rhythm: Set regular review dates for cash flow, whether monthly or quarterly
- Consider growth implications: As your business grows, your cash flow preparation process should evolve too
Common Pitfalls and How to Avoid Them
The preparation of cash flow statements comes with several typical problems:
- Miscategorization: Incorrectly assigning cash flows to the wrong activities
- Timing issues: Not matching the statement period with actual cash movements
- Software limitations: Some tools don’t handle complex situations well
- Over-delegation: Completely removing yourself from the process as an owner
- Under-utilization: Preparing the statement but not using it for decision-making
The best defense against these issues is knowledge and attention. Understand the basics yourself, even if someone else handles the details.
The Future of Cash Flow Statement Preparation
As technology evolves, preparation is changing too:
- AI and automation are handling more of the data processing
- Real-time statements are becoming possible with advanced accounting systems
- Financial platforms are integrating banking, accounting, and reporting functions
- Visualization tools are making statements more accessible and actionable
Despite these advances, the human element remains crucial. Technology can process the numbers, but judgment and context come from people.
Conclusion: Who Should Prepare Your Cash Flow Statement?
The answer depends on your business’s size, complexity, and your own financial acumen. But regardless of who does the actual preparation, you as the business owner need to understand what the statement shows.
Remember this: the cash flow statement is too important to be completely delegated away. It tells you not just where your cash went, but where your business is going.
In my years working with businesses of all sizes, I’ve noticed that the most successful owners treat their cash flow statement not as an obligatory financial document, but as a crucial decision-making tool—regardless of who prepares it.
So whether it’s you, your bookkeeper, your CFO, or an external accountant putting the numbers together, make sure you’re part of the conversation. Your business’s future quite literally flows through this document.