Welcome to the Fit Small Business Xero training course. In this lesson, we're
going to cover how to create a cash flow statement in Xero. To follow along with me,
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A cash flow statement shows the cash coming in and going out of your
business during a specific time period. Including where it came from and how it
was spent. On this report, transactions are categorized into one of the
following three types of activities: operating activities, investing
activities, and financing activities. Cash in or out for the day-to-day running of
the business is included in the operating activities section of the report.
For example cash received from customers or payments made to suppliers
qualify as operating activities. Investing activities is the cash flow in
or out from purchasing assets for the business such as equipment. This would
include all assets whether they were paid with cash or financed. Any portion
of the purchase that was financed would also appear in the financing activity
section of the report. Financing activities: this is cash coming in or
going out for the purposes of financing all other business activities which
appear in this section of the report. For example any money invested in the
business by the owner and any loans would qualify as financing activities.
Cash flow is essential to staying in business. You must stay on top of your
cash flow to ensure that you have enough cash coming in to cover your obligations
to suppliers and other creditors. In addition you want to have enough cash
flow to reinvest in your business which will help you grow. Cash flow is actually
one of three reports that you should check regularly. The other two are your
income statement and balance sheet report. In the how to create an income
statement lesson, we discuss the importance of reviewing your income and
expenses on a weekly basis to gain insight into trends
that could have a positive or negative impact on your bottom line. We also
discuss the importance of reviewing your assets and liabilities by creating a
balance sheet report. You can click here to access both lessons on the income
statement and the balance sheet report. For the rest of this lesson however,
we'll explore how to create and edit a cash flow statement using Xero. To create
a cash flow statement in Xero, you want to go ahead and click on the reports and
select all reports. The statement of cash flows report is located in the financial
section here. You want to go ahead and note that the statement of cash flows is
one of many reports that has been redesigned as indicated with the new
button here to the right. So we'll go ahead and run a statement of cash flows.
The first field is the date range field. So from the drop down you can select a
preset time period here that you'd like to run the report for, or you can
actually enter custom dates in these fields. Once you've made your selection
for the date range go ahead and click the update button so that the
information on the report will refresh. Here is a sample statement of cash flows
for our fictitious company Acme Web Pros Plus. The cash flow statement can be
saved as a PDF, Excel, or Google sheets document. At the bottom of the report
you'll see a button that says export and then you can select the appropriate
option to save your report. You can also save the cash flow statement as a draft,
published, or custom report. If you save it as a draft, it allows you to create a
report that you or someone else can make changes to later on. You might create
several draft reports before you are ready to publish them. You want to use
the publish option to save reports when you are finalizing the books for the
month or the year. A published report will not change if for some reason the
information in the system has changed. You could only publish reports if you
have the advisor user role. Click here to learn more about user permissions.
And custom: you want to use the custom option if you want to save
the report format so that you don't have to recreate it each time you run the report.
You can save a custom report as your default report. Xero will give you a
prompt for this. We'll show you how to save a custom report format in the next
section here. Similar to both the income statement and the balance sheet report,
you can modify a cash flow statement in the following three ways: you can change
the report title, you can modify the report settings, or you can rearrange the
layout and format of the report. You can easily change the title for most of the
reports that you create in Xero. To do this you just want to go ahead and hover
your mouse right over the title of the report, and you should see a link to the
right that says edit title. Go ahead and click that link and then you can make
the necessary changes to the title of the report. Depending on the report that
you're running in Xero, the report settings will vary. So typically your
report settings on any report will be located to the right of your date range field.
So you can simply just click that report settings link there. For the cash
flow statement, you can actually change the period that you're comparing the
report to. You can change the gross tax net settings here, you can determine
whether you want to show decimals on the report or not, and you can also filter by
what we call tracking categories, in this example would be region. So we've got our
date range selected. So if we go down to the previous period comparison, here you
want to enter the number of periods that you would like to compare the current
report to. So for example, we are running our report for the month of June. If we
were to compare this to the previous period by just selecting a one here,
then the report would add a column for the previous period which in this case would
be the month of May. Tax: by default revenue and expense accounts
will display gross amounts which we'll consider tax inclusive by default. If you
would like revenue and expense accounts to display net amounts, then you'd want to
make the net tax on operating activity selection here. If you prefer to see
whole numbers on your report, then you can simply remove this show decimals
checkmark here, so that that is how you report reflects the numbers. And then
finally tracking category: if you have tracking categories set up in Xero then
you can click the drop-down and you will see a list of the categories that you
can filter your report by. You could either select all the categories as
they've done here, or you can remove that all checkmark and just select certain
categories here. Once you have major selections you want
to be sure to go ahead and click the update button so that the report will
refresh with your changes. So here's our previous period column that I'd
mentioned would show up since we wanted to compare our current month with
our previous period. The edit layout designer tool allows you to make custom
changes to the layout of your reports. You can make changes such as add additional
columns for tracking notes or totals, you can change account groupings, you can
edit formulas, and you can rearrange columns by clicking and dragging them.
So let's go ahead and create a custom report for our fictitious company. If you
scroll down to the bottom of the report you'll see the button that says edit
layout. We want to go ahead and click on that. Now for this particular custom
report Acme Web Pros Plus does not have employees currently. And if you'll
notice here the second line on the report says payments to suppliers and
employees. So we're going to make a simple change and just get rid of that
'and employees' since it's not applicable at this time to our sample company. Up at
the top here for edit layout designer is the actual toolbar. So you can actually
customize the text on a report, you can add a footer to the report,
you can add a row, or you can add a column. In this section of the report you'll be
able to see the changes that you make in real time. So to make the change to the
description that we'd like to do we're going to just simply click on the
particular row that we'd like to change. And then notice over to the right here
is where we actually can edit the text. So we'll just get rid of that 'and
employees' as I mentioned. Once you've made all of your changes you can simply
click this blue done button and then it will make the change to the report and
take us back to our actual cash flow statement. There is our updated cash flow
statement report and as you can see that second line now just says payments to
suppliers, and the 'and employees' piece is gone. Now if we want to go ahead and save
this so that every time we run this cash flow statement it always has this
description, we could actually save this as a custom report. So to do that you
want to go ahead and click the save as button at the very bottom of the report,
and select custom. In this field you want to go ahead and indicate the name of
your custom report so you want to put something that differentiates this
report from the default report. I'm just going to put V1 for version 1,
you can put your name or you can completely rename this altogether. And then you can
also make this the default view for your report. So each time you come in, this is
the version of the cash flow statement that will run. So once you have made all
your changes, you can simply click the save button. And our custom report has
been saved.
That wraps up the lesson on how to create a cash flow statement in
Xero. To access our full Xero course or any of the other lessons in this series,
click this link. You can also find a link below this video for a free 30-day trial
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