A Cash Flow statement plans the cash that flows into the business (revenue) and the cash that flows out of the business (expenses). It is similar to a budget you would keep for a household. It is necessary to plan your budget at least a year in advance while 2 years is preferred. A cash flow is the best estimate to see what actual results will be. A cash flow should be compared with actual results and be modified as needed. Understanding the differences of what you estimated and what actually came into the business is a key tool and allows you to understand your business activity so you can make changes as you go.