Cash flow report

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What is a cash flow report?

A cash flow report is one of the foundational financial statements used in accounting. It shows how cash has flowed in and out of the business over a period of time.

This differs from the income statement, as the cash flow report shows many inflows and outflows of cash that are not revenues or expenses, for example loan payments, investments, and dividends.

The timing of when a revenue or expense is recognized can differ significantly from the time an invoice is paid. On the revenue side for example, it’s common for a company to recognize revenue when an invoice is sent, even though payment has not been received, by debitting Accounts Receivable and crediting Revenue. Later, when the customer pays the invoice, a separate journal entry is created to credit Accounts Receivable, and debit Cash. The former journal entry will show only on the income statement, and the latter journal entry will show only on the cash flow report.

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Traditional vs. simplified cash flow reports

Teal produces a simplified cash flow report rather than a traditional cash flow report. A traditional cash flow report starts from an income statement and makes adjustments for depreciation and other non-cash items, then reports cash flows according to operational, investing, and financing activities. In our experience, a traditional cash flow report is not understandable by an average small business user.

In Teal’s simplified cash flow report, we simply report where cash began, what ledgers caused the cash balance to change, and then report where cash ended. This is a much simpler approach that is easier to follow. That being said, Teal is fully capable of producing traditional cash flow reports, and if you need to offer one, please reach out to our team.

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How does Teal’s cash flow report work?

When you create a new financial account ledger which corresponds to an account that holds funds, such as a bank or credit card, you can enable the report_cash_flow parameter. This will cause this ledger to be included in the calculation of the cash flow report.

Teal will automatically tabulate movements of cash in and out of report_cash_flow enabled accounts to produce a cash flow report. Movements of cash between report_cash_flow enabled accounts are not reported, as they are movements of cash within the business, rather than into or out of the business.

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Cash flow Report

You can use the Get Cash flow report endpoint in order to get the data required for producing a cash flow report for a specific user in a specific time range.

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Tips for ensuring a successful cash flow report

When creating your financial account ledgers it is crucial to properly set the parameter report_cash_flow=True so that the cash flow report can generate properly. If you are not sure what financial accounts to set up with report_cash_flow=True, a safe default is to do this only bank accounts and credit cards. We recommend not including any other financial accounts such as loans or investments if you do not have a specific use case you are trying to achieve.

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Creating the cash flow UI

In order to create a useful cash flow report interface for your users, we recommend adding two UI elements to your report:

• a date picker
• the ability to explore the transactions that are within each listed ledger using the ledger statement report for each ledger

The reports interfaces page provides details and code snippets on how to implement these features.