Cash Flow Statement
Overview
The Cash Flow Statement shows how cash moves in and out of your business over a period of time. Unlike the Profit & Loss report which includes non-cash items like depreciation and accrued expenses, the Cash Flow Statement deals only with actual cash -- money you can see in your bank account.
Why this matters:
You can be profitable on paper and still run out of cash. This happens when:
- Customers owe you money but have not paid yet
- You bought inventory but have not sold it yet
- You invested in equipment that will pay off over years
The Cash Flow Statement shows whether cash is actually flowing into your business faster than it is flowing out. It answers the critical question: "Do I have enough cash to pay my bills?"
The three types of cash flow:
- Operating -- Cash from day-to-day business operations
- Investing -- Cash used for equipment and long-term assets
- Financing -- Cash from loans, owner investments, and distributions
How to Access the Report
- Log in to your autoGMS dashboard.
- From the sidebar, click Financial Reporting.
- Select this report directly from the section list.
- Select Cash Flow.
The report shows cash flow for the current month by default.
You can review the statement in:
- Summary view for all three sections together
- Operating, Investing, and Financing tabs for line-by-line detail
Understanding the Three Sections
Financial Entries can also feed this report. Use Financial Entries for prepaid items, payables, asset purchases, capital contributions, and transfers that should affect cash reporting differently from normal expenses.
Section 1: Operating Activities
This is cash generated or used by your core business operations -- servicing vehicles and selling parts.
Sources of Cash (Inflows)
| Source | What It Is |
|---|---|
| Cash from customers | Payments received for completed work |
| Other operating receipts | Storage fees, shop supplies, miscellaneous income |
Uses of Cash (Outflows)
| Use | What It Is |
|---|---|
| Payments to suppliers | Parts and supplies purchased |
| Payments to employees | Wages and salaries paid |
| Rent paid | Facility lease payments |
| Utilities paid | Electricity, water, internet, etc. |
| Insurance paid | Business insurance premiums |
| Tax payments | VAT/GST remitted, income tax payments |
| Other operating payments | Marketing, subscriptions, miscellaneous expenses |
Net Operating Cash Flow = Inflows - Outflows
A positive number means your operations are generating cash. A negative number means you are spending more cash on operations than you are receiving.
Section 2: Investing Activities
This is cash used for buying (or received from selling) long-term assets.
Sources of Cash (Inflows)
| Source | What It Is |
|---|---|
| Sale of equipment | Cash received from selling tools or equipment |
| Sale of vehicles | Cash received from selling company vehicles |
Uses of Cash (Outflows)
| Use | What It Is |
|---|---|
| Equipment purchases | Lifts, diagnostic tools, specialty equipment |
| Vehicle purchases | Company vehicles, tow trucks |
| Leasehold improvements | Renovations to your facility |
Net Investing Cash Flow = Inflows - Outflows
Investing cash flow is usually negative (you are buying assets), and that is normal for a growing business. It becomes a concern only if you are investing more than you can afford.
Section 3: Financing Activities
This is cash from (or paid to) lenders and owners.
Sources of Cash (Inflows)
| Source | What It Is |
|---|---|
| Loan proceeds | Money received from new loans |
| Owner contributions | Cash the owner put into the business |
Uses of Cash (Outflows)
| Use | What It Is |
|---|---|
| Loan repayments | Principal payments on loans |
| Owner drawings | Cash the owner took out of the business |
| Dividends | Distributions to shareholders (if applicable) |
Net Financing Cash Flow = Inflows - Outflows
In autoGMS, owner capital contributions recorded through Financial Entries appear here as financing inflows. These do not affect operating profit, but they do affect cash movement.
Account-to-account transfers recorded through Financial Entries do not appear as financing income or expense. They are treated as neutral cash movements and do not change net cash flow.
Net Change in Cash
Net Change in Cash = Operating + Investing + Financing
This tells you whether you ended the period with more or less cash than you started with.
Reconciliation
The report reconciles to your bank balance:
Beginning Cash Balance £10,000
+ Net Change in Cash +£3,500
= Ending Cash Balance £13,500
This ending balance should match your bank account.
Reading the Report
Example Cash Flow Statement
CASH FLOW FROM OPERATING ACTIVITIES
Cash received from customers £28,000
Cash paid to suppliers (£8,500)
Cash paid to employees (£12,000)
Cash paid for rent (£2,500)
Cash paid for utilities (£600)
Cash paid for other operating (£1,200)
NET CASH FROM OPERATIONS £3,200
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of equipment (£5,000)
Sale of old equipment £1,000
NET CASH FROM INVESTING (£4,000)
CASH FLOW FROM FINANCING ACTIVITIES
Loan repayment (£1,000)
Owner drawings (£2,000)
NET CASH FROM FINANCING (£3,000)
NET CHANGE IN CASH (£3,800)
Beginning Cash £18,000
Ending Cash £14,200
In this example:
- Operations generated £3,200 (positive)
- Investing used £4,000 (bought equipment)
- Financing used £3,000 (loan payments + owner drawings)
- Overall, cash decreased by £3,800
What the Numbers Mean
Positive Operating Cash Flow -- Your business is generating cash from operations. This is the foundation of a healthy business.
Negative Operating Cash Flow -- Your operations are consuming cash. This is sustainable only short-term (startup phase, seasonal business). Long-term, you need positive operating cash flow.
Negative Investing Cash Flow -- You are investing in assets. Usually fine if funded by positive operating cash flow.
Negative Financing Cash Flow -- You are paying down debt and/or taking money out. Sustainable if operating cash flow can support it.
Using the Report Controls
Period Selection
Choose the time period to analyze:
- This Month -- Current calendar month
- Last Month -- Previous calendar month
- This Quarter -- Current quarter
- Year to Date -- January 1st through today
- Custom Range -- Any dates you specify
Comparison Mode
Compare the selected period to:
- Previous Period -- This month vs. last month
- Same Period Last Year -- This March vs. last March
Comparison helps you spot trends: Is cash flow improving or declining?
Detail Level
Choose how much detail to show:
- Summary -- Just the three main sections
- Detailed -- Individual line items within each section
Key Questions the Report Answers
"Can I afford to pay my bills?"
Look at Net Operating Cash Flow. If it is positive and greater than your upcoming bills, you are fine. If it is negative or very low, you may have trouble.
"Am I generating cash from my work?"
Look at Cash from Operating Activities. This should be positive for a mature business. If you are profitable but operating cash flow is negative, investigate receivables (customers not paying) and inventory (too much stock).
"Can I afford this equipment purchase?"
Compare the equipment cost to your Net Operating Cash Flow. A £10,000 purchase is manageable if you generate £5,000 per month in operating cash. It is risky if you generate only £1,000.
"Am I taking too much money out?"
Compare Owner Drawings to Net Operating Cash Flow. Drawings should be less than operating cash flow. If you are taking out more than the business generates, cash will shrink.
"Why is my bank balance declining?"
Look at each section. Is operating cash flow weak? Are you investing heavily? Are you paying down debt or taking large drawings? The report shows exactly where cash is going.
Cash Flow Forecasting
While this report shows historical cash flow, the same structure helps you plan ahead:
- Estimate next month's customer payments (based on booked work and receivables)
- Estimate supplier payments (based on inventory needs and payables)
- Estimate operating expenses (rent, wages, utilities -- usually predictable)
- Add any planned equipment purchases
- Add loan payments and planned drawings
This gives you a projected ending cash balance. If it is too low, take action now: accelerate collections, delay purchases, or arrange financing.
Methodology
Click the Methodology button in the report header to see how operating, investing, and financing cash flows are categorised, what transactions are included, and how the opening/closing balances are derived.
Tips and Best Practices
-
Reconcile to your bank. The ending cash balance on this report should match your bank balance. If it does not, investigate.
-
Focus on operating cash flow. This is the most important number. A business can survive negative investing or financing cash flow, but not sustained negative operating cash flow.
-
Watch for warning signs. Declining operating cash flow over multiple months is a red flag, even if you are profitable on the P&L.
-
Compare to profit. If profit is £5,000 but operating cash flow is -£2,000, something is wrong. Usually, it is receivables (customers not paying) or inventory (buying more than selling).
-
Use comparison mode. A single month's cash flow can be misleading. Compare multiple periods to see trends.
-
Plan major purchases. Before buying equipment, check if operating cash flow can support it. If not, plan how you will finance it.
-
Review monthly. Monthly cash flow review catches problems before they become crises.
Frequently Asked Questions
Why is my cash flow different from my profit?
Profit (from the P&L) includes non-cash items:
- Depreciation -- A P&L expense but not a cash outflow
- Accrued expenses -- Expenses recorded but not yet paid
- Receivables -- Revenue recorded but cash not yet received
Cash flow shows only actual cash movements.
What if operating cash flow is negative?
Short-term negative operating cash flow happens. Maybe you had a slow month, or a big supplier payment. Long-term negative operating cash flow is a problem -- your business is consuming more cash than it generates.
How do I improve operating cash flow?
- Collect receivables faster (send reminders, offer early payment discounts)
- Negotiate longer payment terms with suppliers
- Reduce inventory (buy what you need, when you need it)
- Increase prices or reduce costs
What is "free cash flow"?
Free Cash Flow = Operating Cash Flow - Capital Expenditures
It represents cash available for loan repayments, owner distributions, or saving. A positive free cash flow means you are generating excess cash.
Should investing cash flow be negative?
Usually, yes. A growing business invests in equipment and assets. Negative investing cash flow is concerning only if funded by debt rather than operating cash flow.
How is this different from the bank statement?
The bank statement shows every transaction. The Cash Flow Statement organizes those transactions into meaningful categories (operating, investing, financing) so you can understand where cash is going.
Can I see cash flow for individual customers?
The standard Cash Flow Statement shows totals. For customer-level cash analysis, use the Aged Receivables report to see who owes you money and who has paid.
What if the ending balance does not match my bank?
Check for:
- Unrecorded transactions in autoGMS
- Outstanding checks (written but not cleared)
- Deposits in transit
- Bank fees not yet recorded
- Timing differences
Reconcile regularly to catch these issues early.