{"id":23561,"date":"2025-10-17T11:54:05","date_gmt":"2025-10-17T10:54:05","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=23561"},"modified":"2025-10-19T23:51:26","modified_gmt":"2025-10-19T22:51:26","slug":"cash-flow-statement-explained","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/cash-flow-statement-explained\/","title":{"rendered":"Cash flow statement explained"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tCash flow statement explained\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2025-10-17T11:54:05+01:00\">17 October, 2025<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Cash flow statement explained\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/cash-flow-statement-explained\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/yassirmalik\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2024\/03\/Yassir-Malik.jpg\" class=\"entry-author__image\" alt=\"yassir-malik-profile-picture\" \/>\t\t\t\t<span class=\"entry-author__name\">Yassir Malik<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n\n\n<p class=\"has-paragraph-medium-font-size\">A cash flow statement offers a clear view of your business\u2019s financial health, showing how well it\u2019s performing during the current reporting period and over time.&nbsp;<\/p>\n\n\n\n<p>Whether you\u2019re a small business owner, an entrepreneur planning for growth, or part of an accounting team keeping payroll and bills on track, understanding your cash flow is essential.&nbsp;&nbsp;<\/p>\n\n\n\n<p><a href=\"https:\/\/www.sage.com\/en-gb\/blog\/financial-statements-grow-business\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Financial statements<\/strong><\/a> are vital for informing decision-making for leadership, investors, and creditors.&nbsp;<\/p>\n\n\n\n<p>Cash is the lifeblood of your company, so the management team needs to monitor the cash flow at all times to ensure survival balanced with growth.&nbsp;<\/p>\n\n\n\n<p>This guide covers what a cash flow statement is, what it shows, how to read it, and how to prepare one that supports better planning.&nbsp;&nbsp;<\/p>\n\n\n\n<p>It also explores why it\u2019s a must-have tool for anyone doing market research, considering new opportunities, or assessing business performance over time.&nbsp;<\/p>\n\n\n\n<p>To get a head start, you can also <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/cash-flow-statement-template\/\" target=\"_blank\" rel=\"noreferrer noopener\">download our cash flow template<\/a>.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-here-s-what-we-ll-cover\">Here\u2019s what we\u2019ll cover<\/h4>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-what-is-a-cash-flow-statement\" data-level=\"2\">What is a cash flow statement?<\/a><\/li><li><a href=\"#h-what-is-a-cash-flow-statement-used-for\" data-level=\"2\">What is a cash flow statement used for?<\/a><\/li><li><a href=\"#h-what-does-a-cash-flow-statement-show-you-about-your-business\" data-level=\"2\">What does a cash flow statement show you about your business?<\/a><\/li><li><a href=\"#h-what-should-a-cash-flow-statement-include\" data-level=\"2\">What should a cash flow statement include?<\/a><\/li><li><a href=\"#h-the-3-main-activities-of-a-cash-flow-statement\" data-level=\"2\">The 3 main activities of a cash flow statement<\/a><\/li><li><a href=\"#h-what-are-cash-equivalents\" data-level=\"2\">What are cash equivalents?<\/a><\/li><li><a href=\"#h-how-to-read-a-cash-flow-statement\" data-level=\"2\">How to read a cash flow statement<\/a><\/li><li><a href=\"#h-cash-flow-statement-vs-income-statement-vs-balance-sheet\" data-level=\"2\">Cash flow statement vs. income statement vs. balance sheet<\/a><\/li><li><a href=\"#h-the-differences-between-uk-gaap-and-ifrs\" data-level=\"2\">The differences between UK GAAP and IFRS<\/a><\/li><li><a href=\"#h-cash-flow-statement-example\" data-level=\"2\">Cash flow statement example<\/a><\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-a-cash-flow-statement\">What is a cash flow statement?<\/h2>\n\n\n\n<p>A cash flow statement is a simple report that discloses your business\u2019s cash outflows and inflows during a reporting period.&nbsp;<\/p>\n\n\n\n<p>It highlights where the cash came from and how it was spent, giving you a real-time picture of your business\u2019s financial activity.&nbsp;&nbsp;<\/p>\n\n\n\n<p>It also helps you confirm whether your business can meet its everyday expenses and pay off any debts.&nbsp;<\/p>\n\n\n\n<p>Also known as a statement of cash flows, this document is one of the three core financial statements every business needs\u2014alongside the balance sheet and the income statement (often called the profit and loss account).&nbsp;<\/p>\n\n\n\n<p>We\u2019ll compare these three reports in depth below, but essentially:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Cash flow statements<\/strong>\u202fshow how much your business has on hand and how it\u2019s being generated and used.&nbsp;<\/li>\n\n\n\n<li><strong>Balance sheets<\/strong>\u202fshow your business\u2019s assets, liabilities, and equity.&nbsp;<\/li>\n\n\n\n<li><strong>Income statements<\/strong>\u202fshow your business\u2019s profitability.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>Cash flow statements follow standardised formats and formulas.&nbsp;<\/p>\n\n\n\n<p>In the UK, the format of your cash flow statement depends on the accounting standards your business follows. Most businesses use one of the following:&nbsp;&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.frc.org.uk\/library\/standards-codes-policy\/accounting-and-reporting\/uk-accounting-standards\/frs-102\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Financial Reporting Standard 102 (FRS 102) (part of UK GAAP)<\/strong><\/a><strong> \u2013<\/strong> commonly used by small to medium-sized businesses.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.ifrs.org\/use-around-the-world\/use-of-ifrs-standards-by-jurisdiction\/view-jurisdiction\/united-kingdom\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>International Financial Reporting Standards (IFRS)<\/strong><\/a><strong> \u2013<\/strong> typically used by larger companies or those with international operations.&nbsp;&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>If your business follows IFRS, your cash flow statement must comply with International <a href=\"https:\/\/www.ifrs.org\/issued-standards\/list-of-standards\/ias-7-statement-of-cash-flows\/#:~:text=The%20aggregate%20cash%20flows%20arising,the%20statement%20of%20financial%20position.\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Accounting Standard 7: Statement of Cash Flows (IAS 7)<\/strong><\/a>, which outlines how to report cash movements during a financial period.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-a-cash-flow-statement-used-for\">What is a cash flow statement used for?<\/h2>\n\n\n\n<p>This financial statement serves several purposes for internal and external decision makers:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Creditors<\/strong>\u202fmay use it to assess your organisation\u2019s liquidity (e.g. the amount of cash on hand to meet short-term obligations).&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Investors<\/strong>\u202fmay use it to measure your company\u2019s financial health and inform their valuation.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Shareholders<\/strong>\u202fmay use it to monitor the strength of their investments over time&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Accounting staff<\/strong>\u202fmay use it to confirm whether your business can cover essential outgoings like payroll, tax liabilities, and overheads.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Potential hires and stakeholders <\/strong>(such as suppliers and customers) may view strong cash flow as a sign of financial stability, which can help build confidence in your business.&nbsp;&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Market research<\/strong> may use it to assess the state of the market and the performance of their direct or indirect competitors.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>Because cash flow statements follow standardised reporting rules (such as FRS 102 or IFRS), they also work well as comparative tools. For example, you can use them to:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Compare two or more companies within the same industry or market.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Track a single company\u2019s performance over several months or financial years.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>Cash flow statements can be produced monthly, quarterly, or annually, depending on your reporting needs.&nbsp;<\/p>\n\n\n\n<p>This is why accurate <a href=\"https:\/\/www.sage.com\/en-gb\/accounting-software\/ledger-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>general ledger reconciliation<\/strong><\/a> is critical; even small errors can distort your overall cash picture.&nbsp;<\/p>\n\n\n\n<p>If your business is listed on the London Stock Exchange (including <a href=\"https:\/\/www.londonstockexchange.com\/raise-finance\/equity\/aim\">AIM<\/a>), you\u2019ll need to include cash flow statements in your financial disclosures under IFRS. <\/p>\n\n\n\n<p>These disclosures are also subject to audit requirements and regulatory review under the UK Companies Act and IFRS, ensuring accuracy and compliance with legal standards.<\/p>\n\n\n\n<p>This standardisation makes the cash flow statement a cornerstone of external accountability, especially in public markets.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-does-a-cash-flow-statement-show-you-about-your-business\">What does a cash flow statement show you about your business?<\/h2>\n\n\n\n<p>A statement of cash flow answers many important questions about the health of your business. <\/p>\n\n\n\n<p>For example:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How liquid is your business?<\/h3>\n\n\n\n<p>This statement tells you exactly how much cash your business has on hand at the end of the reporting period. <\/p>\n\n\n\n<p>It confirms if you can pay debts and operating expenses in cash.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What are your biggest sources of cash inflow and outflow?<\/h3>\n\n\n\n<p>The simplicity of this report makes it easy to see which activities contribute most to your business\u2019s income and expenses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How is your cash flow likely to look in the future?<\/h3>\n\n\n\n<p>You can compare multiple consecutive statements to identify patterns, anticipate future cash flow, and make data-driven decisions about business plans.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Is your business likely to receive financing?<\/h3>\n\n\n\n<p>Investors and lenders often review cash flow to make decisions about providing loans, lines of credit, and funding.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-should-a-cash-flow-statement-include\">What should a cash flow statement include?<\/h2>\n\n\n\n<p>Cash flow statements follow a structure that lists your business\u2019s operating, investing, and financing activities.<\/p>\n\n\n\n<p>Each activity type appears in a dedicated section. This way, it\u2019s easy to see which has the biggest impact on your business\u2019s cash flow.<\/p>\n\n\n\n<p>After listing your business\u2019s activities, the statement shows the total increase or decrease in cash and cash equivalents. A positive number reflects a net increase, while a negative number reflects a net decrease.<\/p>\n\n\n\n<p>The statement also includes the opening balance of cash and cash equivalents for the reporting period.<\/p>\n\n\n\n<p>This figure equals the closing cash balance for the previous period and can be placed either at the top of the statement or at the end with the closing balance.<\/p>\n\n\n\n<p>At the end of the statement is the closing balance of cash and cash equivalents for the current reporting period.<\/p>\n\n\n\n<p>This closing balance figure will become the opening balance for the subsequent reporting period.<\/p>\n\n\n\n<p>Cash flow statements also disclose non-operating non-cash activities, such as renegotiating debt as a debt\/equity swap.<\/p>\n\n\n\n<p>The placement of non-cash disclosures depends on the accounting standard your business follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Under FRS 102,<\/strong> these transactions may also appear in the notes to the financial statements, rather than within the body of the cash flow statement itself.<\/li>\n\n\n\n<li><strong>Under IFRS (IAS 7)<\/strong>, non-cash investing or financing activities are typically disclosed in a footnote to the cash flow statement.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-3-main-activities-of-a-cash-flow-statement\">The 3 main activities of a cash flow statement<\/h2>\n\n\n\n<p>Every cash flow statement includes three main sections. Each details a specific type of cash inflow or outflow.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-operating-activities\">Operating activities<\/h3>\n\n\n\n<p>Operating activities refer to standard business activities.<\/p>\n\n\n\n<p>This section of the statement shows how much cash your company generates through its core operations, such as selling products or providing services.<\/p>\n\n\n\n<p>Cash from operating activities includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Selling goods or services<\/li>\n\n\n\n<li>Paying suppliers and vendors<\/li>\n\n\n\n<li>Making interest or income tax payments<\/li>\n\n\n\n<li>Paying wages or salaries to employees<\/li>\n\n\n\n<li>Making rent payments for company facilities<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-pullquote\"><blockquote><p>Note: <br><br>Interest received and interest paid may be classified differently depending on the accounting standard. <br><br>Under IFRS, interest paid can be classified as either operating or financing, and interest received can be classified as either operating or investing. <br><br>FRS 102 allows similar flexibility, but classifications should be applied consistently.<\/p><\/blockquote><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-investing-activities\">Investing activities<\/h3>\n\n\n\n<p>Under IFRS, loans made to subsidiaries or third parties, as well as repayments received, are typically classified as investing activities.<\/p>\n\n\n\n<p>This section reports cash used for or generated from acquiring or disposing of long-term assets, investments, or subsidiaries.<\/p>\n\n\n\n<p>Cash flow from investing activities includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Purchase or sale of property, plant, and equipment (PPE).<\/li>\n\n\n\n<li>Under IFRS, loans made to subsidiaries or third parties, as well as repayments received, are typically classified as investing activities.<\/li>\n\n\n\n<li>Purchasing marketable securities such as IP rights, or contracts.<\/li>\n\n\n\n<li>Acquisition or disposal of subsidiaries or business segments.<a id=\"_msocom_1\"><\/a><\/li>\n<\/ul>\n\n\n\n<p>For investment companies, investing is part of doing business. In this case, any cash paid or owed for investments appears in the operating activities section.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-financing-activities\">Financing activities<\/h3>\n\n\n\n<p>Financing activities refer to &nbsp;transactions that result in changes to the size and composition of a business\u2019s equity and borrowings.&nbsp;<\/p>\n\n\n\n<p>This section of the cash flow statement shows how much cash your company generates from raising funds and repaying debt.<\/p>\n\n\n\n<p>Cash flow from financing activities includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Proceeds from loans or issuance of equity (e.g., shares).<\/li>\n\n\n\n<li>Repayment of loan principal<\/li>\n\n\n\n<li>Dividends paid to shareholders<\/li>\n\n\n\n<li>Repaying debt principal.<\/li>\n\n\n\n<li>Making payments to shareholders.<\/li>\n\n\n\n<li>Purchase or redemption of company shares.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-pullquote\"><blockquote><p>Note: <br><br>Under IFRS, interest paid can be classified as either financing or operating activity, depending on your company\u2019s policy and disclosure.<\/p><\/blockquote><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-cash-equivalents\">What are cash equivalents?<\/h2>\n\n\n\n<p>A cash flow statement includes both cash and cash equivalents.<\/p>\n\n\n\n<p>Cash equivalents are short-term, highly liquid investments that can easily be converted into cash, typically with a maturity of three months or less and minimal risk of value fluctuation.<\/p>\n\n\n\n<p>Some examples of cash equivalents include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Currency<\/li>\n\n\n\n<li>Bank accounts<\/li>\n\n\n\n<li>Treasury bills<\/li>\n\n\n\n<li>Short-term government bonds<\/li>\n<\/ul>\n\n\n\n<p>Both the opening and closing balances in a cash flow statement include cash and cash equivalents.<\/p>\n\n\n\n<figure data-wp-context=\"{&quot;imageId&quot;:&quot;6a2a303f5f3ac&quot;}\" data-wp-interactive=\"core\/image\" data-wp-key=\"6a2a303f5f3ac\" class=\"wp-block-image size-full wp-lightbox-container\"><img loading=\"lazy\" decoding=\"async\" width=\"1425\" height=\"710\" data-wp-class--hide=\"state.isContentHidden\" data-wp-class--show=\"state.isContentVisible\" data-wp-init=\"callbacks.setButtonStyles\" data-wp-on--click=\"actions.showLightbox\" data-wp-on--load=\"callbacks.setButtonStyles\" data-wp-on-window--resize=\"callbacks.setButtonStyles\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/07\/Image-2-1.jpg\" alt=\"An illustration of a person dropping a coin into a giant cashier till.\" class=\"wp-image-23670\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/07\/Image-2-1.jpg 1425w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/07\/Image-2-1-768x383.jpg 768w\" sizes=\"auto, (max-width: 1425px) 100vw, 1425px\" \/><button\n\t\t\tclass=\"lightbox-trigger\"\n\t\t\ttype=\"button\"\n\t\t\taria-haspopup=\"dialog\"\n\t\t\taria-label=\"Enlarge\"\n\t\t\tdata-wp-init=\"callbacks.initTriggerButton\"\n\t\t\tdata-wp-on--click=\"actions.showLightbox\"\n\t\t\tdata-wp-style--right=\"state.imageButtonRight\"\n\t\t\tdata-wp-style--top=\"state.imageButtonTop\"\n\t\t>\n\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"12\" height=\"12\" fill=\"none\" viewBox=\"0 0 12 12\">\n\t\t\t\t<path fill=\"#fff\" d=\"M2 0a2 2 0 0 0-2 2v2h1.5V2a.5.5 0 0 1 .5-.5h2V0H2Zm2 10.5H2a.5.5 0 0 1-.5-.5V8H0v2a2 2 0 0 0 2 2h2v-1.5ZM8 12v-1.5h2a.5.5 0 0 0 .5-.5V8H12v2a2 2 0 0 1-2 2H8Zm2-12a2 2 0 0 1 2 2v2h-1.5V2a.5.5 0 0 0-.5-.5H8V0h2Z\" \/>\n\t\t\t<\/svg>\n\t\t<\/button><\/figure>\n\n\n\n<p>You can prepare a cash flow statement using either the direct or indirect method for operating activities\u2014both are permitted under FRS 102 and IFRS.<\/p>\n\n\n\n<p>IFRS tends to encourage the indirect method, especially for larger businesses, but you have the flexibility to choose the approach that fits your reporting needs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-direct-method\">Direct method<\/h3>\n\n\n\n<p>The direct method is the more straightforward of the two. It\u2019s particularly well suited to businesses using the cash basis accounting method, which is more common among smaller companies following FRS 102.<\/p>\n\n\n\n<p>This method works like a simple cashbook, where you list and total all cash payments and cash receipts from the reporting period to calculate net cash flow.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-indirect-method\">Indirect method<\/h3>\n\n\n\n<p>The indirect method starts with net profit and adjusts for changes in working capital.<\/p>\n\n\n\n<p>It is more commonly used by companies applying accrual accounting and preparing full IFRS or FRS 102 accounts.<\/p>\n\n\n\n<p>This is because the indirect method uses your company\u2019s income statement as the starting point for calculating cash flow.<\/p>\n\n\n\n<p>The income statement counts income and expenses when they\u2019re accrued.<\/p>\n\n\n\n<p>To use this method, start with the net income. Then, adjust it by adding or subtracting all non-cash items.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.sage.com\/en-gb\/blog\/better-fixed-asset-depreciation-process\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Asset depreciation<\/strong><\/a> and amortisation are some of the most common adjustments. Both of these items decrease income, but they aren\u2019t cash expenses.<\/p>\n\n\n\n<p>An<a href=\"https:\/\/www.ifrs.org\/news-and-events\/news\/2024\/04\/new-ifrs-accounting-standard-will-aid-investor-analysis-of-companies-financial-performance\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>&nbsp;April 2024 amendment to IFRS<\/strong><\/a>&nbsp;requires companies to begin using the operating profit subtotal as the starting point for the indirect method. This change affects annual periods starting on or after <strong>1<sup>st<\/sup> January 2027<\/strong>.<\/p>\n\n\n\n<p>It\u2019s important to note that cash flow statements do not include non-cash transactions such as depreciation, amortisation, or stock adjustments. <\/p>\n\n\n\n<p>These are excluded because they do not represent actual cash movements<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-read-a-cash-flow-statement\">How to read a cash flow statement<\/h2>\n\n\n\n<p>When reviewing a cash flow statement, finance professionals typically look for one of two outcomes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Does your business have positive cash flow (more cash coming in than going out)?<\/li>\n\n\n\n<li>Or is it showing negative cash flow (more cash going out than coming in)?<\/li>\n<\/ul>\n\n\n\n<p>It\u2019s important to remember that a cash flow statement captures your cash movements over a defined reporting period, not a snapshot at a single point in time.<\/p>\n\n\n\n<p>To get a fuller picture of your business\u2019s financial health, you should always compare multiple statements over different reporting periods.<\/p>\n\n\n\n<p>&nbsp;Comparing cash flow statements over time reveals whether your business is expanding, contracting, or undergoing a transition.<\/p>\n\n\n\n<p>In more serious cases, &nbsp;persistent negative cash flow may indicate financial distress or a risk of insolvency.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-negative-cash-flow\">Negative cash flow<\/h3>\n\n\n\n<p>A statement showing negative cash flow indicates your business is spending more cash than it\u2019s receiving.<\/p>\n\n\n\n<p>Although this outcome may seem undesirable, it doesn\u2019t always signal a serious problem.<\/p>\n\n\n\n<p>Your business\u2019s growth or funding stage may negatively affect cash flow for a limited time.<\/p>\n\n\n\n<p>While cash flow may be negative during this period, ideally, the trend will reverse.<\/p>\n\n\n\n<p>As an example, additional context or deeper analysis may reveal that your business is undergoing rapid growth or expansion.<\/p>\n\n\n\n<p>In addition, early-stage startups often have a higher burn rate before becoming profitable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-positive-cash-flow\">Positive cash flow<\/h3>\n\n\n\n<p>A statement showing positive cash flow indicates your business is bringing in more cash than it\u2019s paying out.<\/p>\n\n\n\n<p>On a surface level, more cash flowing in than out reflects a financially healthy business.<\/p>\n\n\n\n<p>However, positive cash flow doesn\u2019t always equal a profitable business.<\/p>\n\n\n\n<p>As a result, it\u2019s essential to review your company\u2019s income statement and balance sheet to analyse the underlying factors.<\/p>\n\n\n\n<p>As an example, your business can achieve a positive cash position by taking out a large loan to mitigate cash flow problems.<\/p>\n\n\n\n<p>This position may be temporary\u2014and it may reverse once the repayment period begins.<\/p>\n\n\n\n<p>Some fluctuation is inevitable. But businesses with uneven cash flow over multiple reporting periods often appear unstable.<\/p>\n\n\n\n<p>Investors may view their risk level as too high and decline to fund them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-cash-flow-statement-vs-income-statement-vs-balance-sheet\">Cash flow statement vs. income statement vs. balance sheet<\/h2>\n\n\n\n<p>As useful as cash flow statements are, they only tell part of the story of your company\u2019s financial health.<\/p>\n\n\n\n<p>To gain a comprehensive view of financial health, it\u2019s important to review the cash flow statement alongside the income statement and balance sheet.<\/p>\n\n\n\n<figure data-wp-context=\"{&quot;imageId&quot;:&quot;6a2a303f60ae2&quot;}\" data-wp-interactive=\"core\/image\" data-wp-key=\"6a2a303f60ae2\" class=\"wp-block-image size-full wp-lightbox-container\"><img loading=\"lazy\" decoding=\"async\" width=\"1441\" height=\"776\" data-wp-class--hide=\"state.isContentHidden\" data-wp-class--show=\"state.isContentVisible\" data-wp-init=\"callbacks.setButtonStyles\" data-wp-on--click=\"actions.showLightbox\" data-wp-on--load=\"callbacks.setButtonStyles\" data-wp-on-window--resize=\"callbacks.setButtonStyles\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/07\/Image-3.jpg\" alt=\"An infographic with green, grey, and black sections uses icons and descriptions to make financial statements clear, including a section where the cash flow statement is explained alongside balance sheets and profit and loss accounts.\" class=\"wp-image-23673\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/07\/Image-3.jpg 1441w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/07\/Image-3-768x414.jpg 768w\" sizes=\"auto, (max-width: 1441px) 100vw, 1441px\" \/><button\n\t\t\tclass=\"lightbox-trigger\"\n\t\t\ttype=\"button\"\n\t\t\taria-haspopup=\"dialog\"\n\t\t\taria-label=\"Enlarge\"\n\t\t\tdata-wp-init=\"callbacks.initTriggerButton\"\n\t\t\tdata-wp-on--click=\"actions.showLightbox\"\n\t\t\tdata-wp-style--right=\"state.imageButtonRight\"\n\t\t\tdata-wp-style--top=\"state.imageButtonTop\"\n\t\t>\n\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"12\" height=\"12\" fill=\"none\" viewBox=\"0 0 12 12\">\n\t\t\t\t<path fill=\"#fff\" d=\"M2 0a2 2 0 0 0-2 2v2h1.5V2a.5.5 0 0 1 .5-.5h2V0H2Zm2 10.5H2a.5.5 0 0 1-.5-.5V8H0v2a2 2 0 0 0 2 2h2v-1.5ZM8 12v-1.5h2a.5.5 0 0 0 .5-.5V8H12v2a2 2 0 0 1-2 2H8Zm2-12a2 2 0 0 1 2 2v2h-1.5V2a.5.5 0 0 0-.5-.5H8V0h2Z\" \/>\n\t\t\t<\/svg>\n\t\t<\/button><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-cash-flow-statement\">Cash flow statement<\/h3>\n\n\n\n<p>This statement reflects the reality of your company\u2019s cash position at the end of the reporting period.<\/p>\n\n\n\n<p>It details what happened to the cash and whether your company has enough on hand to operate effectively.<\/p>\n\n\n\n<p>It only includes cash inflows and outflows that have already occurred.<\/p>\n\n\n\n<p>A cash flow statement doesn\u2019t include credit-based sales or other income or expenses that haven\u2019t yet flowed into or out of your business.<\/p>\n\n\n\n<p>As a result, income statements and cash flow statements can show seemingly contradictory results.<\/p>\n\n\n\n<p>An income statement may show a profit if your business has incurred substantial income, while a cash flow statement may show negative cash flow if your business has spent more cash than it received.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-income-statement\">Income statement<\/h3>\n\n\n\n<p>An income statement serves as the starting point for the indirect method of calculating cash flow.<\/p>\n\n\n\n<p>Also called a <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/profit-and-loss-account-financial-statement\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>profit and loss (P&amp;L)<\/strong><\/a> statement, it reflects your company\u2019s net income at the end of the reporting period. It shows the cumulative effect of all revenue and expenses.<\/p>\n\n\n\n<p>It includes several components that don\u2019t factor into cash flow, such as credit-based sales and depreciation.<\/p>\n\n\n\n<p>Neither of these line items reflect cash flowing into or out of your business.<\/p>\n\n\n\n<p>That\u2019s because the accrual method that most businesses use records income when it\u2019s earned and expenses when they\u2019re incurred. Often, this timing doesn\u2019t align with when the cash arrives or leaves the account.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-balance-sheet\">Balance sheet<\/h3>\n\n\n\n<p>A <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/balance-sheet-use-financial-statement\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>balance sheet<\/strong><\/a> reflects your company\u2019s financial position at a specific point in time, showing what it owns and owes.<\/p>\n\n\n\n<p>Think of this financial statement as a report that calculates your company\u2019s value.<\/p>\n\n\n\n<p>It reveals your company\u2019s available resources, including assets, liabilities, and owner equity. In other words, it tallies how much your company owns and how much it owes.<\/p>\n\n\n\n<p>This report doesn\u2019t include revenue, expenses, or cash inflow and outflow.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-differences-between-uk-gaap-and-ifrs\"><strong>The differences between UK GAAP and IFRS<\/strong><\/h2>\n\n\n\n<p>Businesses typically prepare their financial statements under either FRS 102 or IFRS, depending on their size, complexity, and reporting obligations.<\/p>\n\n\n\n<p>Both frameworks require a cash flow statement as part of the financial statements (except for certain small entities under FRS 102 Section 1A), but there are some key differences in how these statements are structured.<\/p>\n\n\n\n<p>Here\u2019s how FRS 102 and IFRS differ when preparing cash flow statements:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Cash equivalents<\/h3>\n\n\n\n<p>Under IFRS (IAS 7), cash and cash equivalents include short-term, highly liquid investments with maturities of three months or less from the date of acquisition, subject to minimal risk of changes in value.<\/p>\n\n\n\n<p>FRS 102 adopts a similar definition but allows slightly more flexibility in how cash equivalents are interpreted and disclosed, especially for entities not applying full IFRS-level disclosure requirements.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Classifications of interests and dividends<\/h3>\n\n\n\n<p>IFRS allows flexibility in classifying interest and dividends as operating, investing, or financing activities.<\/p>\n\n\n\n<p>From 1 January 2027, amendments to IAS 7 will mandate the use of a single classification approach for interest and dividends, enhancing consistency across reporting entities.<\/p>\n\n\n\n<p>FRS 102 is less prescriptive and allows more discretion, provided classifications are applied consistently.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Bank overdrafts<\/h3>\n\n\n\n<p>Both IFRS and FRS 102 allow bank overdrafts repayable on demand to be included in cash equivalents if they form part of daily cash management.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. Method of preparation<\/h3>\n\n\n\n<p>Both standards allow the direct or indirect method to calculate cash flows from operating activities<\/p>\n\n\n\n<p>IFRS encourages the indirect method, especially for larger or listed companies.<\/p>\n\n\n\n<p>FRS 102, often used by smaller businesses, is more flexible. Many SMEs opt for the direct method due to its simplicity.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-cash-flow-statement-example\">Cash flow statement example<\/h2>\n\n\n\n<p>This example illustrates how a typical cash flow statement looks.<\/p>\n\n\n\n<figure data-wp-context=\"{&quot;imageId&quot;:&quot;6a2a303f62199&quot;}\" data-wp-interactive=\"core\/image\" data-wp-key=\"6a2a303f62199\" class=\"wp-block-image size-large wp-lightbox-container\"><img loading=\"lazy\" decoding=\"async\" width=\"577\" height=\"810\" data-wp-class--hide=\"state.isContentHidden\" data-wp-class--show=\"state.isContentVisible\" data-wp-init=\"callbacks.setButtonStyles\" data-wp-on--click=\"actions.showLightbox\" data-wp-on--load=\"callbacks.setButtonStyles\" data-wp-on-window--resize=\"callbacks.setButtonStyles\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cashflow-statement-template-example-577x810.jpg\" alt=\"An example of a cash flow statement template.\" class=\"wp-image-25200\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cashflow-statement-template-example-577x810.jpg 577w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cashflow-statement-template-example-547x768.jpg 547w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cashflow-statement-template-example-768x1078.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cashflow-statement-template-example-1094x1536.jpg 1094w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cashflow-statement-template-example-1459x2048.jpg 1459w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2025\/10\/cashflow-statement-template-example-scaled.jpg 1823w\" sizes=\"auto, (max-width: 577px) 100vw, 577px\" \/><button\n\t\t\tclass=\"lightbox-trigger\"\n\t\t\ttype=\"button\"\n\t\t\taria-haspopup=\"dialog\"\n\t\t\taria-label=\"Enlarge\"\n\t\t\tdata-wp-init=\"callbacks.initTriggerButton\"\n\t\t\tdata-wp-on--click=\"actions.showLightbox\"\n\t\t\tdata-wp-style--right=\"state.imageButtonRight\"\n\t\t\tdata-wp-style--top=\"state.imageButtonTop\"\n\t\t>\n\t\t\t<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"12\" height=\"12\" fill=\"none\" viewBox=\"0 0 12 12\">\n\t\t\t\t<path fill=\"#fff\" d=\"M2 0a2 2 0 0 0-2 2v2h1.5V2a.5.5 0 0 1 .5-.5h2V0H2Zm2 10.5H2a.5.5 0 0 1-.5-.5V8H0v2a2 2 0 0 0 2 2h2v-1.5ZM8 12v-1.5h2a.5.5 0 0 0 .5-.5V8H12v2a2 2 0 0 1-2 2H8Zm2-12a2 2 0 0 1 2 2v2h-1.5V2a.5.5 0 0 0-.5-.5H8V0h2Z\" \/>\n\t\t\t<\/svg>\n\t\t<\/button><\/figure>\n\n\n\n<p>You can download a <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/cash-flow-statement-template\/\" target=\"_blank\" rel=\"noreferrer noopener\">cash flow statement template here<\/a>.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p>To help you prepare your financial statements, <a href=\"https:\/\/www.sage.com\/en-gb\/sage-business-cloud\/intacct\/\" target=\"_blank\" rel=\"noreferrer noopener\">Sage Intacct<\/a> has 150 financial reports that allow easy access to your financial information.<\/p>\n\n\n\n<p>With Sage <a href=\"https:\/\/www.sage.com\/en-gb\/accounting-software\/financial-reporting\/\" target=\"_blank\" rel=\"noreferrer noopener\">financial reporting software<\/a> you can create custom reports to help with your reporting, leaving you more time to focus on the management and growth of your business.<\/p>\n\n\n\n<p>You can also have a real-time visibility into your financial data through Sage <a href=\"https:\/\/www.sage.com\/en-gb\/accounting-software\/cash-management\/\" target=\"_blank\" rel=\"noreferrer noopener\">cash management software<\/a>, which help you create accurate forecasts and build financial plans confidently.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><em>This article was verified by UK and Ireland-based Certified Public Accountant (CPA). Accounting rules are complex and change frequently and we recommend you seek any accounting advice from a qualified CPA.<\/em><\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-b1a63862-3fa0-4a5e-bb67-c76b88bbc6b8\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n<section class=\"more-topics alignfull has-grey-light-background-color wp-block-sage-post-topics\">\n\t<div class=\"container\">\n\t\t<div class=\"row\">\n\t\t\t<div class=\"col col-12 col-lg-4\">\n\t\t\t\t<h3 class=\"more-topics__title h2\">Browse more topics from this article<\/h3>\n\t\t\t<\/div>\n\t\t\t<div class=\"col col-12 col-lg-8\">\n\t\t\t\t<ul class=\"post-tags__list\">\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/accountant-accounting\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tAccountant accounting\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/bookkeeping\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tBookkeeping\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/cash-flow\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tCash flow\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/financial-education\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tFinancial education\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t<\/ul>\n\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n<\/section>\n\n<div class=\"alignfull wp-block-sage-related-posts\">\n\t<section class=\"related-posts card-grid has-dark-background-color\">\n\t<div class=\"container\">\n\t\t\t\t\t<div class=\"row\">\n\t\t\t\t<div class=\"col\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--featured h1\">Explore more wisdom<\/h2>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t\t\t<div class=\"row related-posts__featured\">\n\t\t\t\t<div class=\"col card-grid__item\">\n\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-0 post-1043 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-alternative-finance tag-cash-flow tag-crowdfunding business_type-small-business card-post--is-clickable\"\n>\n\t<div class=\"card-post__media-wrapper\">\n\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"999\" height=\"666\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2017\/08\/0J9A9593.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2017\/08\/0J9A9593-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2017\/08\/0J9A9593-768x512.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2017\/08\/0J9A9593.jpg 999w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\t<\/div>\n\n\t<div class=\"card-post__content\">\n\t\t\t\t\t<div class=\"card-post__label\">Recommended<\/div>\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-05T13:25:08+01:00\">5 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">9 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h3\">\n\t\t\t\t\t\t\t<a\n\t\t\t\t\tclass=\"card-post__title-link\"\n\t\t\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/a-business-guide-to-borrowing-money\/\"\n\t\t\t\t>\n\t\t\t\n\t\t\tA business owner&#8217;s guide to borrowing money\n\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/p>\n\n\t\t\n\t\t\t\t\t<p class=\"card-post__description\">\n\t\t\t\tIt&#8217;s a necessary requirement for most businesses but the good news is that it needn&#8217;t be painful of even expensive. Here&#8217;s how to borrow in the best way for your business growth and success.\t\t\t<\/p>\n\t\t\n\t\t\t<\/div>\n\n\t<\/article>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\n\t\t\t\t\t<div class=\"row related-posts__non-featured\">\n\t\t\t\t<div class=\"col col-12\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--more h4\">More on this Topic<\/h2>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-1 post-30318 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-bookkeeping tag-payments business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-ap-automation\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-768x512.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T16:58:53+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">11 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tAccounts payable automation: How it works, key benefits, and why your business needs it\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-2 post-30315 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-bookkeeping tag-e-invoicing business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-an-electronic-invoice\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-875247398-684x384.jpg\" class=\"card-post__image\" alt=\"Dealing with payroll tasks for the business\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-875247398-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-875247398-768x513.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-875247398-1214x810.jpg 1214w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T16:16:14+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">9 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tWhat is e-invoicing? Advantages and disadvantages of electronic invoicing\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-3 post-30313 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-bookkeeping tag-payments business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-an-automated-billing-system\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-580503469-1-684x384.jpg\" class=\"card-post__image\" alt=\"Running a business\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-580503469-1-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-580503469-1-768x432.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-580503469-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T15:54:42+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">10 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tWhat is an automated billing system?\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-4 post-15795 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-accountant-accounting tag-accountant-automation tag-brexit-business tag-business-finances business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-account-reconciliation\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/08\/GettyImages-1325244864-1-684x384.jpg\" class=\"card-post__image\" alt=\"man in office\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/08\/GettyImages-1325244864-1-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/08\/GettyImages-1325244864-1-768x432.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/08\/GettyImages-1325244864-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T15:28:18+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">10 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tAccount reconciliation: What it is and best practices\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A cash flow statement can explain a lot about your business. This guide outlines how to read the statement, what it should cover, and preparation methods.<\/p>\n","protected":false},"author":1774,"featured_media":19429,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"sage_hide_published_date":false,"sage_hide_read_time":false,"sage_hide_share_buttons":false,"footnotes":""},"categories":[6,9],"tags":[223,23,24,127],"business_type":[4,115],"lilypad":[],"context":[],"industry":[],"persona":[67,73,74,75],"imagine_tag":[220,91,109],"coauthors":[355],"class_list":["post-23561","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","category-strategy-legal-operations","tag-accountant-accounting","tag-bookkeeping","tag-cash-flow","tag-financial-education","business_type-small-business","business_type-accountants"],"sage_meta":{"region":"en-gb","author_name":"Yassir Malik","featured_image":"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2024\/08\/Woman-calculating-operating-profit-of-business.jpg","imagine_tags":{"220":"Accountant accounting","91":"Growing business","109":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice UK","distributor_original_site_url":"https:\/\/www.sage.com\/en-gb\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/23561","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/users\/1774"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/comments?post=23561"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/23561\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media\/19429"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media?parent=23561"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/categories?post=23561"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/tags?post=23561"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/business_type?post=23561"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/lilypad?post=23561"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/context?post=23561"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/industry?post=23561"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/persona?post=23561"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/imagine_tag?post=23561"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/coauthors?post=23561"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}