Digitalisation is tidying things up: although the indirect method of cash flow determination is still used as "state of the art" in most companies, it is no longer up to date.
But what are the differences between the indirect and direct methods and what are the possible advantages or disadvantages? Before we answer this question, let's take a brief look at the contents of the cash flow statement.
The cash flow statement shows where cash inflows and outflows come from, what they are used for and how cash and cash equivalents develop.
We differentiate the cash flows into three areas:
We differentiate into the area of operations, the area of investments and the area of financing activities.
This information provides insight into the financial position of the company, its (future) liquidity and its financing through equity or debt.
Not only are these insights of interest to investors, but management can also use this liquidity-critical information to react to opportunities and risks at short notice, provided the information is available promptly - i.e. as up-to-date as possible.
There are, as I said, two possibilities: the indirect and the direct method.
With the indirect method for determining cash flow, which is no longer up-to-date but is widely used, the items affecting or not affecting liquidity have to be determined retrogradely with a lot of manual effort for the annual financial statement.
To determine the cash flow statement according to the indirect method, accounting data is used almost exclusively.
Historically, however, it has not been the objective of accounting to provide information on the liquidity situation and financial strength of a company. Thus, the data are not available in the desired form and obtaining this information at the end of the period is correspondingly costly.
This contrasts with the direct method. However, the direct method requires a data and information structure that accounting cannot provide in this form either without considerable manual effort. The "cash effect", i.e. the liquidity effect, would have to be identified, analysed and "written down" from every booking, from every business transaction.
In simplified terms, this looks as follows:
However, in addition to the actual analysis, some additional things have to be observed, such as the issue of value-added tax: the value-added tax included in the receivables is "cash" at first glance, but it becomes a liability to the tax office. Thus the "cash effect" is zero. The same applies - of course with the opposite sign - to the input tax included in the liabilities.
The areas of "financing activities" and also "investment activities" have already had to be published for some time as part of the annual financial statement according to the direct method. This is a predictable handicap for companies to also present the area of "operating activities" according to the direct method in the future.
However, the derivation of the cash flow statement in this direct way is not feasible for companies due to the large number of business transactions and the associated manual effort.
The solution: The module "Cash Flow Accounting" automatically shows the current financial position of the company according to the direct method.
Das Modul ist ein integrierter, aber zugleich komplett gekapselter Teil des SAP-Systems und besteht wiederum aus den beiden Anwendungen „Liquiditätsrechnung“ und „Liquiditätsplanung“.
Mittels der Liquiditätsrechnung wird jede Buchung in zahlungswirksame und -unwirksame Positionen zerlegt.
Die Liquiditätsrechnung zeigt also die Mittelherkunft und die Mittelverwendung auf Basis der Ist-Zahlen. Die Berechnungen erfolgen tagesaktuell, beeinflussen das Tagesgeschäft jedoch nicht und liefern die gewünschten Informationen auf Knopfdruck, d.h. Cash Flow Statement realtime.
Auf derselben Stammdatenstruktur baut die Liquiditätsplanung auf. Drei Datenbestände mit Planzahlen – anstatt der Ist-Zahlen – laufen in die rollierenden Planungsberechnungen ein und zeigen, wie sich die Plan-Liquiditätssituation des Unternehmens zukünftig entwickelt.