# Cash flows classification **URL:** \ **Category:** ideas\ **Created:** [July 16, 2024, 9:21pm UTC](https://forum.manager.io/t/cash-flows-classification/54951 "2024-07-16T21:21:05Z")\ **Posts on this page:** 15\ **Page:** 1
**Author:** ![WSD](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/wsd/32/50610_2.png) [@WSD](https://forum.manager.io/u/WSD)\ **Post date:** [July 16, 2024, 9:21pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/1 "2024-07-16T21:21:05Z")
Hello, I think the cash flow statements generated by Manager need improvements. Operating activities include changes in retained earnings. Normally cash transactions involving equity accounts are financing activities. Investing activities include all acquisitions, both cash and non cash. Normally, non cash transactions are excluded. Instead of focusing on simplicity, I believe it would be more useful if users are allowed to classify each cash transaction by providing options when they create payments and receipts ---
**Author:** ![shahabb](https://avatars.discourse-cdn.com/v4/letter/s/838e76/32.png) [@shahabb](https://forum.manager.io/u/shahabb)\ **Post date:** [July 16, 2024, 9:43pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/2 "2024-07-16T21:43:46Z")
Have you tried Cash flow statement groups? ---
**Author:** ![WSD](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/wsd/32/50610_2.png) [@WSD](https://forum.manager.io/u/WSD)\ **Post date:** [July 17, 2024, 2:36am UTC](https://forum.manager.io/t/cash-flows-classification/54951/3 "2024-07-17T02:36:27Z")
Yes, but they are applicable to individual accounts. I wish the grouping options are available in payments and receipts. Thank you ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [July 17, 2024, 9:48am UTC](https://forum.manager.io/t/cash-flows-classification/54951/4 "2024-07-17T09:48:38Z")
@WSD it would be better if screenshot would be shown for the context. There are two layouts for cash flow statement - direct and indirect method. Indirect method shows how net profit reconciles to operating activities. In order to explain reconciliation, non-cash and non-operating activities are included too. ---
**Author:** ![shahabb](https://avatars.discourse-cdn.com/v4/letter/s/838e76/32.png) [@shahabb](https://forum.manager.io/u/shahabb)\ **Post date:** [July 17, 2024, 11:32am UTC](https://forum.manager.io/t/cash-flows-classification/54951/5 "2024-07-17T11:32:36Z")
@lubos i think he want to select cash flow category on every line of each receipt or payment. Then those transactions would appear under that Category on CF statement. If custom fields and other fields filtering and grouping is extended to all reports (P&L BS, CFS Inventory reports etc), then that would allow us to obtain any kind of report such as customer, division/project, custom field specific reports. ---
**Author:** ![WSD](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/wsd/32/50610_2.png) [@WSD](https://forum.manager.io/u/WSD)\ **Post date:** [July 17, 2024, 1:27pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/6 "2024-07-17T13:27:39Z")
Yes, that’s exactly what I mean. I purchased a laptop from my regular supplier. The laptop was a piece of equipment, because I would use it in the office. So, the acquisition should be classified as an investing activity. With the current features however, Manager treats it as operating, because the account payable is affected by the transaction I believe by providing classification options in the payments and receipts, the problem would be solved. Thanks Pada Rab, 17 Jul 2024 18.42, Shahab via Manager Forum \<[notifications@manager1.discoursemail.com](mailto:notifications@manager1.discoursemail.com)\> menulis: ---
**Author:** ![AJD](https://avatars.discourse-cdn.com/v4/letter/a/a9adbd/32.png) [@AJD](https://forum.manager.io/u/AJD)\ **Post date:** [July 17, 2024, 2:01pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/7 "2024-07-17T14:01:45Z")
> [@WSD](#): > > Yes, that’s exactly what I mean. I purchased a laptop from my regular supplier. The laptop was a piece of equipment, because I would use it in the office. So, the acquisition should be classified as an investing activity. If you are expensing this equipment rather than capitalising it, then I suggest you create an expense account called “Expensed equipment” and nominate it as an Investing Activity. ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/9/4/94c8f8a39227a19344f23a97ea6c29d139e0a813.png) ---
**Author:** ![shahabb](https://avatars.discourse-cdn.com/v4/letter/s/838e76/32.png) [@shahabb](https://forum.manager.io/u/shahabb)\ **Post date:** [July 17, 2024, 2:55pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/8 "2024-07-17T14:55:36Z")
Using Indirect method its where it should be ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/6/0/605bf3b6373899c5bbab428fd268e06133e915c0.png) On direct method its showing as operating activity ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/b/b/bb39f01671d4e6a702a629bb2d8a49a69c687441.png) Lets call it a limitation of direct method. ---
**Author:** ![AJD](https://avatars.discourse-cdn.com/v4/letter/a/a9adbd/32.png) [@AJD](https://forum.manager.io/u/AJD)\ **Post date:** [July 17, 2024, 11:44pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/9 "2024-07-17T23:44:03Z")
You are correct @shahabb . The Indirect method reports correctly, but the Direct method reports incorrectly. This is how it appears if you use the Expensed Equipment account as I suggested: Indirect Method: ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/c/e/ceb6e7356018b6f72019d983be72e1ae5c9f0919.png) Direct Method: ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/e/6/e6008dce33d0c933d011ba908e2d7172b3686c2b.png) ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [July 18, 2024, 1:08am UTC](https://forum.manager.io/t/cash-flows-classification/54951/10 "2024-07-18T01:08:02Z")
This is related to already existing topic in `bugs` > [@Direct Method Cash Flow Statement not reporting correctly](https://forum.manager.io/t/direct-method-cash-flow-statement-not-reporting-correctly/52430): > > The Direct Method Cash Flow Statement is not classifying items correctly. See screenshots below of comparison between direct method and indirect method. The direct method statement is reporting all amounts under Operating Activities when some of it should be reported as Investing activities. It is possible to get the Direct Method to report correctly if I record the transaction as a payment only (not as Purchase invoice then payment). Is there something that I am not doing correctly? I agree that direct and indirect methods need to be consistent. Currently direct method is not looking into invoices. ---
**Author:** ![WSD](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/wsd/32/50610_2.png) [@WSD](https://forum.manager.io/u/WSD)\ **Post date:** [July 18, 2024, 6:37pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/11 "2024-07-18T18:37:31Z")
But equipment should be depreciated, not expensed when it is acquired. Also retained earnings, it’s a built-in equity account n manager, why the change in the balance is treated as operating? No field to change the “default” classification. With regard to the direct method results in different outcome to indirect method, it confirms my first suggestion, something has to be done to improve the reports 🙏🙏🙏 ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [August 2, 2024, 2:42am UTC](https://forum.manager.io/t/cash-flows-classification/54951/12 "2024-08-02T02:42:16Z")
Please have a look how `Cash Flow Statement` looks like in the latest version (24.8.2) Direct and indirect method will produce consistent reports. ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [August 3, 2024, 1:23am UTC](https://forum.manager.io/t/cash-flows-classification/54951/13 "2024-08-03T01:23:41Z")
There doesn’t appear to be a consensus whether cash flow statement should be looking at underlying accounts behind invoices or not. When new receipt is recorded against invoice that is charging for `Sales`. Which account should be credited on cash flow statement? `Accounts receivable` or `Sales` ? In the current version it’s `Sales` but some users argue it must be `Accounts receivable`. Accounting standards do not get this technical. Either way is acceptable. I think more correct way is `Sales` but I’m wondering whether it’s not overcomplicating the report. It could be `Accounts receivable` and if you want to override it for whatever reason, perhaps on cash transactions you could choose cash flow statement group if required. That is what @WSD originally suggested. ---
**Author:** ![WSD](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/wsd/32/50610_2.png) [@WSD](https://forum.manager.io/u/WSD)\ **Post date:** [August 3, 2024, 3:34pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/14 "2024-08-03T15:34:59Z")
Yes, accountants as we are know exactly what cash receipts/payments belong to. I prefer the direct method, and just add a field in the respective forms, add settings to map the line-items, it would do I believe ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [August 3, 2024, 9:40pm UTC](https://forum.manager.io/t/cash-flows-classification/54951/15 "2024-08-03T21:40:44Z")
I came to conclusion that cash flow statement should not be looking at underlying accounts behind receipts / payments linked to invoices. Mostly because it adds another layer of complexity and makes it more difficult to see where the figures are coming from for very little marginal benefit. I will go ahead with @WSD original idea and that is to allow users to pick cash flow statement group on individual receipts and payments to override default classification. This means when you are drilling-down to transactions from cash flow statement, it will be easy to recategorize individual receipts or payments if they belong elsewhere on cash flow statement.