Cash Flow Report and How to Make it

Cash Flow Report and How to Make it


The important thing that you have to take into account in an industry or company is the cash flow report. Because, it is very useful to track financial condition.

That way, you will know how much money is coming in and going out. In addition, the data can be more neat and organized. So, if one day you need it, you can get it easily.

Cash Flow Report and Reason for Use

Just imagine if you do not use financial statements at all. The only thing that can be done is guess. Even though this estimate will not bring much benefit and tends to suffer losses.

That’s because there is no exact data. In taking the next steps will be difficult, so the company is difficult to progress. Therefore, know in full about this cash flow statement.

Definition of Cash Flow Report

The definition of a cash flow statement is a type of financial report that presents relevant information. Namely regarding the cash flow of a company, both incoming and outgoing.

Meanwhile, according to the KBBI, it is the income and expenditure of company money. Be it from daily, weekly, or specific time results. A statement of cash flows usually comes from several sources.

Also read: Definition of Financial Statements, along with the Types and Benefits

These include operational activities, corporate funding, and investment activities. Incoming cash flows can be in the form of cash or investments from company owners.

Meanwhile, cash outflows can be in the form of debt or company expenses that must be paid. Therefore, cash flow activities are divided into 3, namely operational, investment, and funding.

This report is not only for large-scale companies, but also small industries need to use it. Because, it will also be useful to evaluate the company’s performance per month or per year.

The Purpose and Benefits of a Statement of Cash Flows

The main thing of this report is information about the receipt and disbursement of funds. From this information, you can determine a strategy for the next step.

Not only that, the cash flow statement is also very useful to ensure the company’s needs. In addition, to determine the exact salary of your employees. The following is the purpose of the cash report.

  • Determine the payment according to the company’s ability
  • Predicting future cash flows
  • As a decision to improve or improve the company’s performance
  • Net profit reporting

Meanwhile, the benefits are also quite a lot for the internal company. In fact, external parties can also feel the benefits, such as creditors, investors, and others.

  • Knowing the company’s ability to pay dividends and employee salaries
  • Provides complete information about cash flow
  • Can measure the success of a company

If you look at the purpose and benefits of the cash flow statement, then it is an important thing. Your company’s financial data will also be better coordinated.

2 Ways to Make a Cash Flow Statement

There are two methods for preparing or compiling a company’s cash flow statement. These include direct and indirect methods. Both have their own advantages and disadvantages.

Also read: How to Prepare a Simple Income Statement

Therefore, first know the full explanation of the two methods. That way, it will be easier for you to choose between the two.

1. Direct Method Cash Flow Report

If you want to create a simple cash flow statement using this method, then prepare the data sources. The direct method uses data from the petty cash book and bank cash book. Here are the steps.

  1. Cross-Check
    Some documents need to be cross-checked. Whether it’s from the bank cash book, check hump, checking account, and patty cash (petty cash book). Another term for this activity is reconciliation.
  2. Cross Elimination
    After the cross-examination stage is complete, the next step is cross-elimination. This work includes all cross-transactions related to the cash book.
  3. Classifying All Types of Expenditure and Income
    The fastest thing to do this step is that you do it every day. So, every time there is an income or expenditure from the cash fund, you can immediately record it.

    That way, the work will be lighter than doing it all at once. Especially if you don’t record it directly, it can take a lot of time to complete the report.

    In this stage, everything is recorded, whether investment, transaction, or funding. For investment, it is related to all fixed asset transactions. Meanwhile, transaction cash flows cover the company’s main activities.

    The last is funding cash flow which includes liabilities and capital transactions of the company. Therefore, why does it take so long to do it all at once.

  4. Prepare a Cash Flow Statement
    After the previous stages are completed, then all you have to do is compile a cash flow statement. Making it will be easier, because all the data has been successfully obtained.

2. Indirect Method Cash Flow Report

After understanding the preparation of the direct method, then familiarize yourself with preparing a cash flow statement with the indirect method. Here are the steps you should pay attention to.

  1. Preparing an Income Statement
    The first thing you should do is prepare an income statement for the current period. From this data, the condition of the company will be known, whether it is in loss or profit.
  2. Preparing a Balance Sheet
    The reports from the balance sheet required are current and previous periods. The goal is to compare the data, so that you can find out financial activities.
  3. Adjusting Net Income to Income Statement
    By adjusting the data according to the income statement, it will obtain cash flow from operating activities. This cash is an important component of the indirect method.
  4. Looking for Investment and Funding Cash Flow
    Not only requires cash flow from operating activities, but also requires investment and funding data. This is done by correcting the effect of transactions other than cash.

    For example, on deferral of operating cash payments, either before or in progress. You can see this data through the balance sheet, making it easier to find out.

  5. Prepare Cash Flow Report
    The next step after doing some of the steps above is to make a cash flow statement. After all the data is compiled, then all you have to do is evaluate the company’s performance.

    You don’t have to do the cash flow statement process manually. As technology advances, this method can use accounting software. Be it by direct or indirect methods.

    The software provides features to create cash flow reports. In fact, the process will be faster, easier, and more accurate. Because even in the calculation it can be done automatically.

Cash Flow Report Generation with SAP Business One

If you want that way, which is to create value from the use of technology. So, partnering with the Sterling Team is the right solution.

Our team has proven its quality with success with previous partners. You can use information technology to increase productivity.

With the help of the Sterling Team, you will be provided with software that can help prepare financial reports. That way, the process will not be as difficult as before using this step.

If you are interested in collaborating, then go directly to our main page. Or you can also use the SAP Business One software, one of the helpful accounting applications. Visit this website for information.

In addition, you can see for yourself the various achievements in helping various companies. Don’t hesitate to join and enjoy making cash flow reports easier and faster.

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