Cashflow report
In principle, the report is simple, and it is based solely on data that you will also find in the Profit & Loss report, the cash budget, Assets & Liabilities and the Opening balance sheet.
A cash flow statement shows movements in a company's liquid assets, which includes cash and cash equivalents. This statement breaks down the cash flows into three main categories: operating activities, investing activities, and financing activities.
Operating activities: This part of the statement shows cash flows that are the result of the company's core activities, such as the sale of goods and services, payments to suppliers, wages, etc. Thus, changes in the company's working capital are included under operating activities. Working capital is the difference between a company's current assets (e.g., inventories, receivables, and liquid assets) and its short-term liabilities (e.g., supplier debt and short-term loans). It represents the funds a company has available to finance its day-to-day operations. Good management of working capital ensures that the company has sufficient funds to cover its ongoing obligations, while avoiding excessive capital tied up in assets that cannot be immediately converted into cash.
Investing activities: This reports cash flows related to the purchase and sale of assets, for example, investment in machinery, property, or other long-term investments.
Financing activities: This section covers the flow of cash between the company and its owners or creditors, such as dividend payments, borrowing and repayment of loans, and the issuance of shares.
In principle, the statement is quite simple, and it is based solely on figures that you can also find in your operating report, your liquidity budget, your balance sheet, and your forecast balance sheet.
Historical analysis: By analyzing past cash flows, one can gain insights into the company's financial health and ability to generate liquidity. For example, a company may have a healthy net income, but if it does not generate positive cash flows from operations, it could indicate problems with liquidity and day-to-day operations.
Future cash commitments: The cash flow statement can also be used for forecasts. By understanding where cash flows have historically been allocated, the company can better anticipate and plan for future needs for liquid assets. This can lead to more informed decision-making regarding investments, financing, and operating strategies.
Cash Flow in Budget123
You will find the Cash Flow under Reports in the menu to the left. If you get a yellow warning at the bottom of the report, be sure to follow the link in the text, as there is some setup you need to have in place.
In the "Cash Flow Setup," you will find three columns. The goal is to move everything from right to left, meaning you should place everything from your chart of accounts into lines and sections on the Cash Flow Report.
In the first column, you will find 4 main sections (Operating Activities, Investing Activities, Financing Activities, and Liquidity). In each of the first three sections, you can add new lines and change the order of the lines. Under Liquidity, you can only see which accounts are chosen under System Accounts.
In the second column, find lines that should be dragged to the left and placed in a section in the first column. But before you do that, make sure that column 3 is empty, meaning all accounts and account groups from your chart of accounts are moved from right to left. Of course, you can drag directly from column 3 to 1 if you already have the line you want on the report in 1.
Use +/- to expand/collapse lines and account groups, and remember that you can just click on the names of the lines to edit.
The red and green color on accounts indicate whether they will have a positive or negative impact on the cash flow, depending on whether it is an income/expense or asset/liability.
If you want to edit your cash flow report, simply click on the name (header) or one of the section names.
