What is the difference from an income statement?

A Cash Flow Statement records actual cash receipts and payments; the income statement reports accrual-based revenue and expenses. Use the cash flow to verify liquidity independent of noncash accounting entries.

Can a Cash Flow Statement be electronically signed?

Yes. Electronic signatures are generally enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA where adopted, provided intent, consent, attribution, and record retention requirements are met.

Who should sign the statement?

Typically the preparer, controller, or CFO signs and dates the statement. Signatures document responsibility and support audit trails; lenders may require an authorized officer's attestation.

How do I correct an error after signing?

Issue a corrected statement with a clear revision date and explanation. Retain the original and the corrected version with an audit trail showing who approved changes.

When is notarization required?

Not ordinarily required for internal reporting. Notarization or RON may be needed when the statement is submitted under oath, used in legal filings, or specifically requested by a counterparty.

How long should I keep supporting documents?

Retain bank reconciliations, bank statements, and supporting schedules for at least three years for IRS purposes and longer where industry rules or contracts require it.

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Cash Flow Statement

Cash Flow Statement

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What a Cash Flow Statement Is and where it fits

A Cash Flow Statement is a financial report that reconciles changes in a company's cash position over a reporting period by grouping cash inflows and outflows into operating, investing, and financing activities. It explains how net income and noncash items convert into cash, shows opening and closing cash balances, and supports liquidity analysis, covenant compliance, and audit procedures. Public companies include it with other core financial statements; private firms use it for management reporting, lender packs, and forecasting.

Why a well-prepared Cash Flow Statement matters

A clear Cash Flow Statement reveals actual liquidity, supports credit decisions, and reduces the risk of covenant breaches. It complements the balance sheet and income statement for a complete financial picture and provides evidence for auditors, lenders, and internal stakeholders.

Who prepares and relies on a Cash Flow Statement

Typical preparers and recipients include internal finance teams, external accountants, lenders, and investors who need a concise view of cash movement.

Finance teams and controllers preparing monthly and quarterly cash reconciliations.
External auditors and CPAs verifying cash balances and disclosures.
Lenders and investors assessing repayment ability and covenant compliance.

Core components to include in a professional Cash Flow Statement

A professional Cash Flow Statement follows standard sections and provides supporting detail for key adjustments and noncash items.

Operating activities

Shows cash generated or used by core operations, including adjustments for depreciation, amortization, changes in receivables, inventory, and payables; reconciles net income to cash from operations with clear line-item detail.

Investing activities

Reports cash flows from purchase or sale of property, plant, equipment, and investments; include capital expenditures and proceeds from asset sales with dates and counterparty notes when material.

Financing activities

Captures debt issuance or repayment, equity contributions, dividends paid, and lease payments; identify covenant-related transactions and any new borrowing or equity events.

Net change and balances

Show net increase or decrease in cash, then reconcile to beginning and ending cash and cash equivalents with bank balance detail and restricted cash classification where applicable.

Supplemental disclosures

Include noncash investing and financing activities, significant interest and tax payments, and foreign-currency translation effects to provide context for cash movements and audit testing.

Supporting schedules

Attach reconciliations, bank statements, and schedules of working capital movements to substantiate amounts and speed auditor or lender review.

Essential information fields to capture

Company name: Legal entity name

Reporting period: Start and end dates

Currency: Reporting currency

Opening cash: Beginning cash balance

Net cash change: Total inflows minus outflows

Ending cash: Closing cash balance

Step-by-step: how to prepare a Cash Flow Statement

Follow a consistent sequence to ensure accuracy and support auditability.

01

Gather inputs: Collect trial balance, bank statements, depreciation schedules.
02

Reconcile net income: Adjust for noncash items and changes in working capital.
03

Classify cash items: Assign flows to operating, investing, or financing.
04

Review and attach evidence: Include bank reconciliations and supporting schedules.

How to set up a digital completion workflow

Configure fields and routing rules in your document platform to ensure consistent, auditable completion.

Field mapping	Map data from accounting system to form fields
Conditional visibility	Show schedules only when amounts exceed thresholds
Approval order	Set preparer, reviewer, then approver sequence
Export format	Enable PDF and Excel exports for audit and analysis
Notifications	Email alerts for missing fields or overdue approvals

Where completed Cash Flow Statements typically go

Distribution destinations depend on company status and intended use; document the routing to preserve evidence of delivery and receipt.

Internal finance: Filed with month-end close package and internal management reports
External auditors: Attached to audit workpapers during testing and confirmations
Lenders and investors: Included in covenant reporting or loan application materials
Regulators: Public companies include it in SEC filings; private firms submit on request

Digital signing and file-format considerations

Use platforms that preserve a tamper-evident record, support common input/output formats, and integrate with accounting systems.

File formats: PDF, DOCX, XLSX supported
Authentication: Email, SMS, SSO, or stronger MFA
Integrations: Salesforce, NetSuite, Google Workspace

Typical timing and reporting cadence for Cash Flow Statements

Establish a consistent cadence that aligns with internal close processes, audit cycles, and any contractual reporting requirements.

Monthly close:

Prepare within 7–15 business days after period end

Quarterly reporting:

Finalize within 30 days to support board reviews

Annual audited statements:

Complete audit-ready schedules well before auditor fieldwork

Loan covenant reporting:

Follow frequencies stated in loan agreement (monthly/quarterly)

Ad-hoc requests:

Provide supplemental cash detail within agreed SLA

Common mistakes to avoid when preparing a Cash Flow Statement

Mixing accrual and cash items without clear reconciliation causes misleading cash-from-operations figures and auditor questions.
Failing to document noncash adjustments like depreciation or stock compensation increases audit effort and can delay sign-off.
Omitting restricted cash or misclassifying lease payments can distort liquidity and trigger covenant breaches with lenders.
Using inconsistent period cutoffs for bank reconciliations leads to unexplained reconciling items and restatement risk.

Practical risks and consequences of inaccurate statements

Covenant breach: Accelerated payments or penalties

Audit adjustments: Restatements and additional fees

Regulatory action: Enforcement or disclosure orders

Lender distrust: Loan covenant renegotiation

Tax exposure: Incorrect tax reporting consequences

Operational risk: Poor liquidity decisions

Frequently asked questions about Cash Flow Statements and e-signing

Answers to common questions about preparation, signatures, and corrections. These cover practical steps and legal considerations for U.S. organizations.

Need help? Contact support

What is the difference from an income statement?
A Cash Flow Statement records actual cash receipts and payments; the income statement reports accrual-based revenue and expenses. Use the cash flow to verify liquidity independent of noncash accounting entries.
Can a Cash Flow Statement be electronically signed?
Yes. Electronic signatures are generally enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA where adopted, provided intent, consent, attribution, and record retention requirements are met.
Who should sign the statement?
Typically the preparer, controller, or CFO signs and dates the statement. Signatures document responsibility and support audit trails; lenders may require an authorized officer's attestation.
How do I correct an error after signing?
Issue a corrected statement with a clear revision date and explanation. Retain the original and the corrected version with an audit trail showing who approved changes.
When is notarization required?
Not ordinarily required for internal reporting. Notarization or RON may be needed when the statement is submitted under oath, used in legal filings, or specifically requested by a counterparty.
How long should I keep supporting documents?
Retain bank reconciliations, bank statements, and supporting schedules for at least three years for IRS purposes and longer where industry rules or contracts require it.

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