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How to Accurately Prepare Statements of Cash Flows

Management Reporting
Statement of Cash Flows
5 min read
Published: June 26, 2020
Last Updated: August 8, 2023

A statement of cash flows presents the story of how your company manages its operating, investing, and financing activities. It's the backbone of some of your company's most important metrics. Do you want to risk that to a rushed, poorly managed, or incomplete process? Errors in a statement of cash flows can often stick out, and take attention away from the true story behind the numbers. Think of it like when the best dressed person you know is caught wearing an untucked shirt or a clashing outfit—sure, it makes a statement, but the wrong kind.

Too often, accountants start the process already behind in a frustrating game of hurry-up-and-wait until it's time for a fevered frenzy of combining financial statements, trial balances, and supporting documentation, made all the more difficult by the fact that each document is in a different format or platform.

"Even before we got started with each close, our team would painstakingly roll forward multiple Excel® files, often with dozens of tabs," says Dominick Fatibene of Workiva, who used to create cash flow statements for one of the 500 largest U.S. companies by total revenue.

"To make it worse, each of us had our own process for requesting and tracking the support we needed, which was often duplicative of other members on the team. Rather than relying on a single, unified process to collect and consume information, we were often requesting the same thing multiple times, even from within our own team. This added unnecessary risk and time to the process."

That's the way too many businesses prepare statements of cash flows.

That broken process leads to an error-prone, time-consuming method to generate a statement of cash flows that is rarely finished on time. So, if that's the wrong way, how do you make sure you're making the right statement with your statement of cash flows? Workiva can help.  

Most businesses recognize the importance of the statement of cash flows, but they aren't aligned on the best process—and the right tools—for putting one together. 

Workiva starts with common sense. Since a statement of cash flows is prepared by combining information into a single document, why not start with all of your data in a single place? Instead of herding cats, pull data from any system and decide how it should be combined. Gather, collect, and aggregate data and supporting commentary submissions from various teams, business units, and regions, all housed within the same platform. 

Having all of your information in one place makes it easier to prepare, summarize, and slice from millions of rows of data. You can also create views based on your needs and attach supporting documentation to add context. 

Making sure that your team has access to important material while keeping proprietary information out of the hands of those who don't need it, helps drive efficiency and security. But, this is difficult with dozens of different spreadsheets flying around. 

With Workiva, you can assign edit or view-only access to contributors—as well as internal and external auditors—down to individual cells, slides, and sections, ensuring the right people are involved right where they're needed. 

With your collaborators in one place, it's easy to keep track of what's going on. The Workiva platform presents a full view of who made what change and when across the entire life of the document.

And, if an update needs to be made, it's done with a single click, not a frustrating slide back to square one. When your data is connected directly to your income statement, balance sheet, and other financial statements across your analysis and reports, your numbers are always up to date in all commentary, charts, and tables. 

Eliminating disparate spreadsheets and countless document versions makes review a productive process, not a hot mess. Everyone can be assured that they are on the same page, because they literally are. 

"Centralizing the team's presentation into one file eliminated the work and time needed to combine the presentation for the review process," says Dominick, whose company started using Workiva. "The cash team was able to refresh a draft of the deck every morning and every evening, allowing the whole team to review and align on the current story and prioritize analysis."  

Remember the purpose of the statement of cash flows? And all those important metrics? The extra hours spent scrambling to put something—anything—together eats up the time for thoughtful, constructive analysis. 

After implementing the Workiva platform, Dominick's company gained 10 days back in their process. "The Senior Executive has a draft of the cash reporting package that would eventually go to the CFO and CEO 10 days earlier," he says. "That means every morning and evening from the fourth day until earnings, the team had the ability to reprioritize and reevaluate priorities." 

That's 10 more days for additional analysis to understand drivers of performance. Ten more days for reviews with business unit FP&A teams and across the corporate accounting, tax, and treasury teams. Ten more days to assure the accuracy of the presentation and messaging. And ultimately, 10 more days to build confidence around the story the team would present in their limited time available to interact with the CEO and CFO. 

For years, Workiva has helped customers find extra time to do better analysis with just a change in process. What could your business do with extra time like that? What kind of statement would you make?

Excel is a registered trademark of Microsoft Corporation in the United States and/or other countries.

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