Almost always, all new businesses ask “What is cash flow and why is it so important?”
The short answer is cash flow is the amount of money coming in to a business and the amount of money going out. The more coming in and less going out is the ideal condition that a business should strive for. The basic cash flow statement depicts the incoming and outgoing flow of cash into your bank, thus providing a clear picture of your business’s net liquidity at the time of generation of cash flow statement.
Cash flow statements are becoming more and more common to be asked by banks these days. Whether the request is for a business loan or merely an overdraft application, bank would ask for the cash flow statememt.