Tips for Developing Cash Flow in Business

Cash flow statements are financial statements that provide records of cash receipts and disbursements within a certain accounting period. 

Through this report, report users can find out information about the influence of cash coming from operating activities, investment transactions, and corporate funding in the financial year concerned. 



One method that can be used in the preparation of this report is the direct cash flow method.

How to Make a Cash Flow Statement for the Direct Method

The preparation of the direct method cash flow statement is based on the cash book / bank which basically only lists the total cash receipts and payments during the period. 

The results of cash flow statements using the direct method are easier to understand because the data presented are grouped by activity (operating, investing, and financing). 

Accounts for depreciation, depreciation, amortization, profit or loss and debt are excluded from the operating activities component. In creating a direct method flow report, at least some of the steps you need to take are as follows.

• Cross-checking between bank books, petty cash books, checking accounts, and tuber checks.

• Delete all cross transactions between cash books.

• Classification of all types of expenditure and cash flows into the statement of cash flows.

Working with the direct cash flow method statement is actually not difficult. But indeed, the time you need to complete the report in this way is relatively longer because you have to collect data first. 

As mentioned earlier, the work in this report format is divided into three activities, namely operations, investment and financing. Thus, the first step you need to take is to collect reports on each PT Dwidaya transaction during February 2020, then group them into operating, investing and financing activities.

• Cash Flow Reports for Operating Activities

This report presents information about a summary of cash receipts and payments according to operating activities. Components that may exist in this report are balance sheet components in the form of assets and liabilities.

• Investment Activity Cash Flow Report

This report presents information about cash transaction activities that originate from buying and selling fixed assets, such as buildings, land, factory facilities, and so on.

• Cash Flow Reports for Funding or Financing Activities

This report presents information about funding activities from the balance sheet component in the liabilities section. 

Cash from funding activities is cash related to the addition or reduction of company capital. The direct method cash flow statement is a statement of cash receipts and disbursements for a certain period by only showing part of operating, investing and financing activities. Meanwhile, to prepare a full report, the first step that must be taken is to collect all the detailed cash data for the period concerned.