Cash flows are all about timing and the flow of cash. To estimate cash flows business owners need to start with an opening bank balance. CPAs term this case as your actual cash on hand. After that, the business owners need to add in all the cash inflows coming in from different sources and subtract the cash outflows for each duration. The remaining balance that remains in hand during the end of a cash flow estimation cycle is referred to as the closing cash balance. The closing cash balance is considered the opening cash balance for the next period. Competent CPAs from Barranco & Associates, LLC help in the accurate compilation of actual vs estimated cash flow in a business.
The estimated cash flow prediction should be considered as a part of the cash flow of a business. Once CPAs have done the calculation of the cash flow forecast, they make sure business owners go back and check whether the estimated cash flow matches the actual cash flows for the period. This matching is considered the most important step. Doing this will underline any differences between estimated and actual and business owners will understand why the cash flow did not meet the forecast expectations.
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