The Statement of Cash Flows answers the question the other two statements do not: where did the cash go? The Profit & Loss says whether you made a profit and the Balance Sheet says what you own. A business can be profitable and still short of cash, because customers have not paid yet, stock was bought, a loan was repaid or equipment was purchased. This statement starts from net income and explains, line by line, how it turned into the actual change in your cash and bank balances.
SeroBooks uses the indirect method, the one QuickBooks Desktop and most accountants use, and then proves the result against the real movement on your cash accounts.
Opening it
- Reports ▸ Company & Financial ▸ Cash Flow, under the grey Accounting screens heading, opens the Accounting screen Statement of Cash Flows.
- Reports ▸ Company & Financial ▸ Statement of Cash Flows and Statement of Cash Flows Prev Year Comparison open the reports, also found in the Report Centre under Company & Financial.
How it is built
The statement has three sections.
| Section | What goes in it | Which accounts |
|---|---|---|
| Operating activities | Net income for the period, adjusted for changes in working capital: customers owing you more uses cash, owing vendors more saves it. | Sub-types accounts_receivable, current_assets, accounts_payable, credit_card, current_liabilities. |
| Investing activities | Buying or selling long-term assets such as equipment and vehicles. | Sub-types fixed_assets, non_current_assets. |
| Financing activities | Loans taken or repaid, and money the owners put in or took out. | Sub-types non_current_liabilities, owners_equity. |
The sign rule is simple: when an asset account goes up, it used cash, so the line is negative; when a liability or equity account goes up, it provided cash, so the line is positive. Your cash and bank accounts themselves (sub-type cash_and_cash_equivalents) are left out of the sections, because they are what the statement explains.
The three sections add up to the net change in cash. SeroBooks then compares that with how much your cash and bank accounts actually moved over the same dates. If the two agree, the statement ties.
The Statement of Cash Flows screen
Read a period
- Open the screen. It covers 1 January to today.
- Click Period, choose a preset, months or Exact dates…, and click Apply.
- Read the banner at the top first: it tells you whether the statement ties.
- Read the three tiles and the table. Click any line to see the entries behind it.
The header reads Statement of Cash Flows with the dates and indirect method. The note beneath says the statement shows where the cash went, as opposed to whether a profit was made. Refresh reads the books again.
The banner
| Banner | Meaning |
|---|---|
| This statement ties to the cash accounts: the three sections come to $X, which is exactly how much cash and bank moved. (green) | Correct and complete. |
| This statement does NOT tie — the sections come to $X while cash and bank actually moved $Y, a difference of $Z. Usually an account has no sub-type set, or nothing is marked as cash. (amber) | Something is classified wrongly. See Common problems. |
| No account is marked as cash | No account in your chart has the sub-type cash_and_cash_equivalents, so every figure is zero because there is nothing to follow, not because no cash moved. |
| Nothing has reached the accounts marked as cash | Some accounts are sub-typed cash_and_cash_equivalents, but they hold nothing while the ledger has entries in the period. The money went through other accounts. |
The last two banners end with the same advice: open the Chart of Accounts and check the sub-type on your bank and cash accounts. The commonest cause is a cash account left sub-typed as a receivable.
The tiles
| Tile | What it shows |
|---|---|
| Cash at start | Your cash and bank balances the day before the period starts, plus any opening balances entered on those accounts inside the period. |
| Net change | The three sections added together, marked increase (green) or decrease (red). |
| Cash at end | Your cash and bank balances on the last day of the period. |
The table
The table has two columns: the line, and Amount. It is read top to bottom and cannot be sorted.
- OPERATING ACTIVITIES: Net income for the period first, then a Change in account line for each working-capital account that moved, then Cash from operating activities.
- INVESTING ACTIVITIES: a Change in line for each long-term asset account that moved, then Cash from investing activities.
- FINANCING ACTIVITIES: a Change in line for each long-term liability and equity account that moved, then Cash from financing activities.
Amounts are green when they added cash and red when they used it. Accounts that did not move are left out.
A small amber ? beside a line means the account has no sub-type (or one SeroBooks does not recognise), so it could not be classified. It is counted in operating activities rather than dropped. Point at the ? to read why, then set the account's sub-type in the Chart of Accounts.
Click any Change in line to open that account's ledger for the period: Opening, Movements, Closing and every line with a running balance. The table's export and email buttons save the statement with its dates. See Print, export and email a report.
Opening balances
Opening balances are a starting position, not activity: entering Inventory $50,000 / Opening Balance Equity $50,000 moved no cash. The screen leaves opening-balance entries out of the three sections, even when they are dated inside the period, and counts any that were entered on cash and bank accounts in Cash at start. Cash at end therefore still equals the cash on your Balance Sheet. See Enter Opening Balances.
The Report Centre versions
| Report | What it shows |
|---|---|
| Statement of Cash Flows | OPERATING ACTIVITIES (Net income and an Increase in or Decrease in line per working-capital account, then Net cash from operating activities), INVESTING ACTIVITIES (Net cash from investing activities), FINANCING ACTIVITIES (Net cash from financing activities), then Net change in cash, Cash at beginning of period and Cash at end of period. |
| Statement of Cash Flows Prev Year Comparison | The same statement for your dates beside the same dates a year earlier, with $ Change. A line that moved only last year still appears, with a blank for this year. |
Each report takes From and To dates and states the cash accounts it used in a note: Treated as cash: followed by the account names. These are the accounts set as Cash in drawer and Bank / card deposits in Accounting Setup, plus every account sub-typed cash_and_cash_equivalents. If none is found, the note says No cash account is identified…. If the sections do not add up to the actual movement on those accounts, a note beginning DOES NOT RECONCILE gives both figures and the difference.
Net income opens the Profit & Loss; every account line opens Transaction Detail by Account. See Running a report and Drilling down from a report.
Permissions
The statement reads the books and changes nothing. Anyone whose role can view accounting reports can open it. See Roles and permissions explained.
Tips
- Reconcile your bank accounts first. A cash flow statement is only as good as the cash figures it explains. See Reconcile a bank or credit card account.
- A large negative Change in Accounts Receivable means sales you have not been paid for yet; see Collections Center.
- Loans belong under non_current_liabilities (or current_liabilities for the portion due within a year) and owners' contributions and draws under owners_equity, so they land in financing rather than operating.
Common problems
The banner says the statement does NOT tie. Look for lines with the amber ?: those accounts have no sub-type. Also check that every bank, savings and cash account is sub-typed cash_and_cash_equivalents and that no cash account is sub-typed as something else. Fix the sub-types in the Chart of Accounts and refresh.
Every figure is zero. Read the banner: no account is marked as cash, or the accounts marked as cash have nothing posted to them. Set the sub-type of the accounts your money actually goes through.
My bank account appears as a Change in line. Its sub-type is not cash_and_cash_equivalents, so it is treated as an ordinary asset. Change its sub-type.
Buying a vehicle shows in operating, not investing. The vehicle account is sub-typed current_assets. Change it to fixed_assets.
Cash at end does not match my bank statement. The statement uses the balance in your books on that date. Uncleared cheques and deposits in transit explain most differences; see Reconcile a bank or credit card account.