How to Generate a Cash Flow Statement in QBO
A Cash Flow Statement shows the actual movement of cash in and out of your business — broken into operating, investing, and financing activity. Here's how to generate it in QBO and what to look for.
A Cash Flow Statement shows the actual movement of cash in and out of your business over a period of time — broken down by operating activity, investing activity, and financing activity. It answers the question: where did the cash come from, and where did it go?
It's particularly useful for businesses that are profitable on paper but struggling for cash (a common situation when customers pay slowly).
What You'll Need
- Access to QuickBooks Online
- A closed and reconciled period (the numbers are only meaningful if the books are accurate)
Normal Procedure
Generating the Cash Flow Statement in QBO
- Go to Reports in the left menu.
- In the search bar, type Statement of Cash Flows (or find it under Business Overview).
- Set the Report period to the month, quarter, or year you want.
- Click Run report.
The report generates in three sections:
Operating Activities
Cash generated or used by the core business — collecting from customers, paying suppliers, payroll, taxes. This is the most important section. Positive operating cash flow means the business generates cash from its operations.
Investing Activities
Cash spent on or received from long-term investments — purchasing or selling fixed assets. Typically shows outflows for equipment purchases and inflows when assets are sold.
Financing Activities
Cash from borrowing or repayments — loan proceeds, loan repayments, owner contributions, drawings, dividends paid.
The three sections add up to the net change in cash for the period. Add this to your opening cash balance and you get your closing cash balance — which should match your Balance Sheet.
How to Read the Results
Look at operating cash flow first.
A profitable business should, over time, generate positive operating cash flow. If your P&L shows profit but operating cash flow is negative, investigate why — common reasons include slow-paying customers (high AR) or inventory buildup.
Investing activities are often negative — that's okay.
If you bought equipment, cash went out. That's not a problem if the asset generates returns.
Financing activities show capital structure changes.
Taking on debt shows as an inflow; repayments show as outflows. Owner contributions and dividends also appear here.
The Direct vs. Indirect Method
QBO uses the indirect method for its Cash Flow Statement — it starts with net income and adjusts for non-cash items and changes in working capital. This is the standard method for small business financial reporting and doesn't require any additional setup.
FAQ
How is the Cash Flow Statement different from my bank account?
Your bank account shows transactions in order. The Cash Flow Statement categorizes those same cash movements into operating, investing, and financing activities — giving you a structured view of where cash came from and went to.
Can I trust the Cash Flow Statement if my books aren't fully reconciled?
No — the quality of the Cash Flow Statement depends entirely on the accuracy of your books. An unreconciled period produces unreliable output. Reconcile first.
My P&L shows strong profit but my cash flow from operations is negative. What's happening?
Usually one of three things: (1) customers owe you a lot and are paying slowly (AR is high), (2) you've built up inventory, or (3) there's a significant timing difference between when revenue is earned and when it's collected. The AR aging report will show if slow collections are the culprit.
How often should I review my Cash Flow Statement?
Monthly, alongside your P&L and Balance Sheet. Together, the three reports give you the complete financial picture: profitability, financial position, and cash movement.