Cash Flow Statements

User Guide: Cash Flow Statement Report

Module: General Ledger / Banking Reports

Report Name: Cash Flow Statement - Direct and Indirect Methods (rep603.php)

This guide explains the purpose of the Cash Flow Statement report, how to generate it, and how to interpret the information presented. It is intended to help users understand cash flow reporting, even if they are unfamiliar with this type of financial report.

How to Access the Report

Follow these steps to generate the Cash Flow Statement report:

1. Log in to your FrontAccounting / Highnix ERP system.
2. From the top navigation menu, select Analytics, General Ledger, or Banking, depending on your menu configuration.
3. Select Banking Reports.
4. Click Cash Flow Statement - Direct and Indirect Methods.
5. Configure the report filters, including the report period, dimensions, bank account, reporting method, and zero-row suppression.
6. Click Print PDF or Excel to generate the report in your preferred format.

Understanding the Cash Flow Statement

A Cash Flow Statement shows how cash enters and leaves a business during a reporting period. Unlike the Profit and Loss Statement, which records income and expenses based on accounting rules, the Cash Flow Statement focuses on cash movements.

It helps management understand the company's cash position, assess its ability to meet payment obligations, and identify changes in cash availability.

The report provides two reporting methods: Direct and Indirect. Select the appropriate method using the Method filter.

Direct Method

Method: NO

The Direct Method reports actual cash receipts and payments recorded in the selected bank and cash accounts.

The report displays individual cash transactions grouped by bank account, allowing users to examine the sources and uses of cash.

Typical entries include:

• Customer receipts and other cash inflows.
• Supplier payments and other cash outflows.
• Transfers between bank accounts.
• Opening balances, transaction details, net changes, and closing balances.

Example:

If a company receives $10,000 from customers and pays $6,000 to suppliers during a month, the net cash inflow from these transactions is $4,000, excluding other cash movements.

The Direct Method is useful when users want to trace cash movements to individual bank accounts and transactions.

Indirect Method

Method: YES

The Indirect Method starts with the company's Net Profit / Loss Before Tax and adjusts it for non-cash items and changes in working capital to determine cash flow from operating activities.

Typical adjustments may include:

• Changes in Accounts Receivable.
• Changes in Accounts Payable.
• Changes in inventory.
• Other working capital movements and applicable non-cash adjustments.

Example:

A company reports a profit before tax of $20,000. During the same period, its Accounts Receivable increases by $5,000 and its Accounts Payable increases by $2,000.

Assuming there are no other adjustments, the operating cash flow is:

Description	Amount
Net Profit Before Tax	$20,000
Less: Increase in Accounts Receivable	($5,000)
Add: Increase in Accounts Payable	$2,000
Net Operating Cash Flow	$17,000

The Indirect Method is useful for understanding why reported profit differs from operating cash flow.

Unlike the Direct Method, the Indirect Method presents a company-wide reconciliation rather than a breakdown of transactions by bank account. Selecting an individual bank account does not restrict the Indirect Method to that account.

Note: The example above is simplified for illustration. The actual report results depend on the ledger balances, transaction postings, and adjustment logic used by the system.

Understanding the Report Layout and Columns

The report uses a landscape layout to present monthly cash movements alongside cumulative totals. The layout includes the following information:

• Column 1 - Account / Transaction Details: Shows bank account descriptions, opening and closing balances, transaction references under the Direct Method, or reconciliation line items under the Indirect Method.
• Columns 2 to 13 - Rolling 12 Months: Show the monthly figures for a rolling 12-month reporting window ending in the selected report period.
• Fiscal YTD - Year to Date: Shows the accumulated amount from the beginning of the current fiscal year up to the selected report period.
• 12 Mo. to Date: Shows the accumulated amount across the entire rolling 12-month reporting window.

These columns allow users to review monthly trends, compare cash movements over time, and assess the cumulative results for the fiscal year and the rolling 12-month period.

Important: The Fiscal YTD period follows the company's configured fiscal year. It may therefore differ from the rolling 12-month reporting window.

Bank Selection and Filtering Options

Bank Selection

The bank selection filter determines which bank and cash accounts are included in the Direct Method report.

• ALL BANK ACCOUNTS: Includes all applicable bank and cash accounts in the report, displaying their individual transaction details and net changes, followed by the TOTAL NET CASH POSITION summary.
• Individual Bank Account: Selecting a specific account, such as USD Account - Chequing, restricts the Direct Method report to that account.

Under the Indirect Method, the report remains a company-wide reconciliation regardless of the selected bank account, because it evaluates company-wide ledger movements rather than cash transactions for an individual bank account.

Dimensions

Use the dimension filters, where applicable, to restrict the report to the relevant business dimension or dimensions. This allows users to review cash flow information for a selected business segment or activity.

The results depend on the dimension assignments and the filtering logic supported by the underlying transactions.

Show Zero Rows

The Show Zero Rows filter determines whether rows with no reported activity are displayed.

• YES: Displays zero-value rows, including accounts or line items without reported amounts.
• NO: Suppresses rows where both the Fiscal YTD and 12-Month totals are zero, making the report more concise and easier to