Having a clear understanding of the movement of cash through your business - where it comes from and how it is spent, gives you valuable insights into your business's financial health. The latest release of Phocas Financial Statements introduces a customizable cash flow statement so you can track the movement of cash with ease. The software allows you to analyze the impact of business changes on the net cash position at all times.
Profit doesn't equal cash
Often the profitability of a business does not reflect the amount of cash flow it has on hand. Sometimes there is more cash flow available than what is reflected in the Profit and Loss statement, so that's where a cash flow statement is helpful – it showcases the relationship between profitability and cash flow throughout an organization.
How the cash flow statement works?
In Phocas Financial Statements, you can create a cash flow statement based on your Profit and Loss and Balance Sheet information. To get all the required detail, the finance team needs to map all the cash inflows and outflows from these two statements. The mapping is straightforward, just clicking or drag and drop. You can use the 'indirect or direct approach', which pulls all the profit information together. Once this is done, a cash flow statement is created , which shows the clear relationship between profit and cash.
In a Phocas cash flow statement, you can see your cash flow at the start and end of the designated period. You can answer the key question: "How come I'm making profit but it isn't showing up in my bank account?". As you can see clearly what positively contributed to the total cash flow from all parts of the business (such as inventory being sold down) as well as what has been draining the company of its cash (such as what was purchased or what loans were paid).
The customization of the cash flow statement makes the interpretation of the movement of cash much more accessible.
To find out more about the new financial solution with customizable cash flow statements, watch this 35-minute video that includes an explanation from an in-house expert, a quick demo showcasing how it works and some feedback from early adopters.