Cash flow, available within the Banking section, refers to the amount, positive or negative, resulting from the activities that constitute the company's core business.
The cash flow determines the liquidity that any company has to meet payments and continue with its activity.
We could define cash flow as the difference between a company's collections and payments in a given period. A concept that measures a company's cash flow by relating cash inflows and outflows.
In short, Cash Flow = Net Income + Depreciation + Provisions.
What are depreciation and provision?
They are the accounting representation of the decrease in the value of the company's assets. However, there are several differences between depreciation and provision.
- Depreciation is an accounting method used in order to allocate the cost of tangible assets over their economic life (the time period that the asset is expected to assist in generating income for the business).
- On the other hand, Provision is an occasional depreciation due to an unforeseen event (e.g. the deterioration of an inventory or the insolvency of a customer).
What is the information available in Cash flow?
Due days chart
This graph allows you to visualize your ending balance, cash in, and cash out on a monthly basis. Another aspect you can see is the total monthly target based on your balance.
This chart has both a linear and bar chart format that shows you your liquidity over a one-year period of time.
Cash flow table
From here you can see all the monthly cash in, cash out, cash in, cash out, whether it be for cash, invoice movements, or tax payments. These amounts can be broken down by book accounts.
Opening balance sheet
From here, you can enter the opening balance sheet that is made at the beginning of the accounting cycle of a company. This balance sheet explains in a summarized form the initial situation of the company at a financial and patrimonial level.
Cash in is represented by the following points:
- Income generated from the sale of products or services offered by the business.
- Interest on loans granted to other companies and dividends received from investments made in other companies.
- Money received from indemnities or other collections from legal disputes.
If in one of the boxes with the detail of a book account in a given month, you will be able to see the documents assigned to that book account, and you will have the possibility of assigning a monthly budget. At the same time, you will be able to know the monthly target in that account compared to the liquidity of that particular month.
Expenses or cash outflows are considered part of the cash outflow and are represented by the following points:
- Payments for the acquisition of goods for production.
- Payment of wages and salaries
- Payment of basic services
- Interest payments on loans received
- Money paid for indemnities or other payments for legal disputes
All collections, payments, or entries related to invoices will be reflected in the Other account. Due to their nature, they will not be reflected as documents in the cash account.
Allows you to see the amount of money invested in tax payments.
Closing balance sheet
The closing balance sheet represents the economic and financial structure of the company at the end of the financial year. This can help you to check for any inconsistencies that may arise in the balances, allowing you to make corrections if necessary.
You can access Settings on the cogwheel at the top right. From there, you can select which documents are shown when you click on an accounting account box in a given month, either cash in or cash out. These are the types of documents to select:
- Sales tickets
- Forecast of payments/receivables
- Sales orders
From Settings, you can also manage sales and expense accounts and assign them to specific groups.
What can you do with Cash flow?
Analyze and configure your cash flow
Learn how to configure your cash flow here