Cash Flow

Accounting standards require an entity to present a statement of cash flows as an integral part of its primary financial statements, it prescribes how to present information in a statement of cash flows about how an entity’s cash and cash equivalents changed during the period.

The presentation of the cash flow statement depends on the business core activity and its industry, however, mainly cash flow can be done using two methods

1. Direct method
2. Indirect method

Or Use your own customized method

In this example, we will explain how to create an automated Cash Flow Report using the indirect cash flow method.

This will involve three steps

The presentation layout of the cashflow is varying according to the industry and legislation, but you can find a standard layout according to the method of your cash flow preparation. We will deliver standard templates under the main two methods

• Use one of the pre-defined layouts
  • CFI_ for Indirect
  • CFD_ for Direct
• Create your own layout CFx_

In this example we use the CFI_Indirect but have modified it like this:

Presentation layout is a club of individual accounts and groups (movements and balances), this should normally include the following activities

1. Cashflows from operating activities
2. Cashflows from finance activities
3. Cash flow from investment activities

We need to create these groups in the COA (Chart of Accounts) under the Account dimension, and also each of these groups should have its sub-activities, so we need to create them as well

Follow the below steps to create the layout

Click on the Dimension > Account > CF_Cashflow >

Then, Use your template, either direct or indirect

In this example, we used an indirect layout

Right-click on the indirect, select new > Parent or Leaf

Parent = This is the main group in your cash flow statement, an example is operating activities (This will aggregate all leaf members)

Leaf = This is the level which you can map your GL accounts

Once you selected either parent or leaf member, you can fill up the required info in the below screen

Description: Name of your group or sub-activity

MemberKey:. Meaningful shortcode (later you will use this shortcode for calculation)

AccountType: This is very important, choose expense if it is a movement and assets if it is a balance

Once we have created the cash flow layout with all categories, we need to map GL Accounts with relevant calculations (Movements or Balance ).

The completed layout looks like this now

If you create a report using this template, you do not see any values as this is completely empty, in order to get values, we should create a business rule

How to create a business rule

Please refer to the below link for the detailed explanation of the business rule

https://docu-pc.com/efp/doku.php?id=v2:admin:br01-ref

The above link explains business rules in detail, however, I will explain few examples of cashflow configuration here .

Once you click on the new business rule, you can fill out the below screen

Fixed Dimension: We created a separate business process (Under the business process dimension ) to store the cashflow calculation, this will be useful to identify cashflow calculation separately from other transactions

Dimension Filter: You can limit your calculation by selection dimensions and its members, here we have limited this calculation for the transaction which are under the consolidated business process and business rule none, you can also limit your result to Actual or budget by selecting the scenario here.

Once this is done, click on the Steps tab

Then you can see the below screen

Under the indirect method, you need to start with net profit, so in this example, we will show how you can map net profit to the cash flow statement

When you click on the steps tab, you can see two buttons in green color, click on the New destination, the destination is the place where you store the final result, in this case, the destination should be CFI_Netincome.

Select CFI_Netincome from the Accounts list

Now you have the destination, so you can define what should be included in this destination, that you need to click on the new step button to the right

Under the steps, select net income account from the income statement

Here the important field is the modifier with parameter, the main parameter we will use for the cashflow are as follows

None: Select this if there is no calculation required, in the above example, we only need the net profit for the period, so we can select none here

Movement: When you need to get the cash inflow or outflow, you need to apply this (mainly for the balance sheet items such as inventory, Accounts payable, Accounts Receivables, etc)

Include all your cashflow accounts (Start from CFI_) in the destinations and include the GL accounts under the steps as above.

Once all mapped, click on the run button to run the business rule for the preferred period.

Once this is run, you can now see the result in your cashflow

You can use either web or Excel to create your cash flow report, creating cashflow report is the same as creating other reports such as P&L and Balance sheet, you can select CF_Indirect in the Account filter.

Refer the below settings