There is one financial report that is extremely valuable for growing restaurant businesses but often not used because it is a beast to prepare – the Statement of Cash Flows.  I thought I would share some notes regarding this report:

  • What is it?    It is a report that displays the sources and uses of cash.
  • What variations are there?  There are two methods:  Direct and Indirect.  Direct starts with Net Income and backs out all the accruals by category and Indirect groups all activities into three simple categories:  Operating, Investing, and Financing.
  • Which is the most popular for restaurants and why?  The Indirect Method because it is what most banks and investors are used to seeing.
  • How often do most restaurants prepare the report?  This answer depends on who is asking for it because it is difficult to prepare with most all software solutions.  Bigger companies with more seasoned staff and more sophisticated reporting constituents will prepare the report each month.   Less sophisticated operators will create the report quarterly because of the difficulty to prepare it.
  • Is there an easy way to prepare it?  Most all restaurant businesses create the report in Excel manually.  Restaurant365, however, comes with an Indirect Statement of Cash flow report right out of the box that eliminates the need to prepare anything manually.  Having this information at your fingertips is one way Restaurant365 adds clarity to your business.

The report is extremely useful for the restaurant business because margins are so thin.  Leveraging your assets wisely is key to responsible growth.  Eliminating the manual work associated with creating a Statement of Cash Flows is one of the many reasons to use Restaurant365 over QuickBooks or generic ERP software.

Morgan Harris  |  Co-founder  |  Restaurant365