Credit Cards and Overdrafts Should Not Be Treated as Cash in Cash Flow

1

Hi Admins,

I would like to suggest an improvement regarding credit cards and overdrafts in the Cash Flow report.

At the moment, all accounts under Cash & Bank are treated as cash. However, credit cards and overdrafts are not real cash — they are liabilities/financing. Because of this, the cash flow statement can show a negative cash balance, while in accounting cash itself cannot be negative.

In substance:

  • Bank account with debit balance = real cash

  • Credit card balance = borrowing/liability

  • Overdraft = liability, not available cash

Including credit cards as cash can make an increase in credit card usage appear as “cash inflow,” which is misleading. It is not cash generated — it is debt being created.

It would be more accurate if credit cards and overdrafts could be treated differently from true cash in the Cash Flow report, so that cash represents only actual available funds and borrowing is reflected separately.

Would it be possible for Manager to distinguish these types of accounts in the cash flow presentation?

Thanks for your consideration.

2

It is possible to show Credit Cards and Bank overdraft in the SOFP (Balance Sheet) by using separate Control Accounts than the accounts that have debit balances.

In terms of the Cash Flow Statement it will only be incorrect if the Cash at beginning/end is negative.

3

Thanks for your input.

Yes, the Balance Sheet part can be handled using separate control accounts — I’ve already done that as well.

My post is only about the Cash Flow Statement, where credit cards and overdrafts are still treated as cash. This can make credit card usage appear as cash inflow and can result in negative cash balances, which doesn’t reflect real liquidity.

That is the specific point I wanted to highlight.

4

Credit cards and overdrafts should not be treated as cash in cash flow because they are borrowed funds, not actual income, and create future repayment obligations.