Are you a business owner or manager with multiple locations? Are you struggling to get a clear picture of how the cash flow is looking across all your entities? Consolidated cash flow reports can be a powerful tool to help you make smarter decisions for all your business locations.
Why is cash flow important
A Profit & Loss report may indicate financial success, however, there may be other factors at play such as outstanding loans, unpaid invoices, or a high volume of open accounts receivable invoices that might impact a company’s ability to access and manage its available cash. Cash flow gives a clearer picture of a business’s financial health. Understanding and managing cash flow is crucial for maintaining financial stability and making informed business decisions.
The importance of consolidated cash flow reports
Consolidated cash flow reports are important because they provide a complete and accurate picture of a company’s financial health by combining the cash flow information of all its entities into a single report. This is especially useful for multi-entity business owners and companies with multiple subsidiaries, as it allows for a more comprehensive analysis of the overall financial situation.
For example, a company may have a profitable subsidiary that is generating strong cash flow, while another subsidiary may be experiencing financial difficulties and generating low cash flow. Without a consolidated cash flow report, it may be difficult to accurately assess the company’s overall financial health.
Also, when analyzing the cash flow of a single entity, inter-company transfers and expenses may not be accurately reflected. They can provide an incomplete or misleading picture of the company’s overall financial situation. Consolidated cash flow reports allow for a more comprehensive view.
The benefits of consolidated cash flow reporting
For investors, consolidated cash flow reports are invaluable. By providing a clear picture of all of your entities, investors can use the information in the report to make more informed decisions about their investments. This allows investors to accurately project and forecast future cash flow, enabling them to create more successful investment strategies.
For business owners, consolidated cash flow reporting is equally important. It gives business owners insights into their overall financial position, allowing them to identify areas where they can focus their efforts to increase revenue. By having access to a comprehensive overview of their finances, business owners can make smarter decisions about the growth and survival of their businesses.
How to get started with consolidated cash flow reporting
Consolidated cash flow reporting is a valuable tool for businesses with multiple locations or entities. At its core, consolidated cash flow reporting is the process of combining the cash flow of all your different entities into one report. This report can include inflows and outflows of money that relate to the everyday operations of a business, investments and assets that generate revenue, and cash flows between business owners and creditors such as borrowing, repaying debts, and dividends.
Once all the individual cash flows are combined, you’ll have a net cash flow figure that gives you an idea of whether your businesses are in a positive or negative cash flow position. This net cash flow figure can then be used to inform decisions about where you should invest resources, where you should cut costs and more.
What to look for in a consolidated cash flow report
What should you look for in a consolidated cash flow report? First, make sure the report includes both incoming and outgoing payments across all entities. It should also be easy to read and understand so that you can quickly see what’s going on. Additionally, the report should be updated regularly, so that you always have an accurate picture of your finances. Finally, a consolidated cash flow report should be customizable. It should allow you to customize it to show only the data you’re interested in, such as incoming and outgoing payments, cash on hand, and other key metrics.
Having a consolidated cash flow report makes it easy to keep track of your finances and make smarter decisions for your business. With the right report in place, you can save time and energy while ensuring that your finances are always in order.
How to use consolidated cash flow reports to make better business decisions
Using cutting-edge accounting automation tools like Docyt allows you to quickly generate consolidated cash flow reports from multiple entities and analyze the data quickly. It also gives you access to advanced features like multi-location comparisons, drill-down filters, export capabilities, and custom time frames. This enables you to look at cash flow in real time and make better business decisions.
Consolidated cash flow reports give you a clear picture of your business’ finances at any given time, allowing you to be proactive rather than reactive when it comes to managing cash flow across all entities. So if you’re looking to make smarter decisions for your business locations, consider using consolidated cash flow reports today.
If you’d like to sign up for the software that makes this process easier on you, visit the Docyt website to schedule a free consultation today.