Cash Flow Statement in Odoo 18
By Braincuber Team
Published on December 29, 2025
Growing startup managing finances creates cash visibility disaster: profitable P&L showing 50K net income but bank account 5K overdrawn causing payroll delay where CEO discovering cash crisis Friday afternoon scrambling emergency loan, large customer owing 100K invoice 90 days overdue but not visible in cash position creating false confidence planning 80K equipment purchase discovering insufficient funds when payment due, advance customer payment 20K received showing as liability not cash inflow confusing available funds for operations, unposted supplier payments remaining in draft status showing 30K higher bank balance than reality causing bounced checks, and no cash flow categorization mixing operating investing financing activities preventing identification whether cash shortage from operations versus capital expenditures—generating liquidity crisis planning failures bounced payments and inability distinguishing operational cash problems from investment timing issues requiring clear cash flow statement tracking actual cash movements by category beyond P&L profitability.
Odoo 18 Cash Flow Statement enables liquidity management through opening balance showing starting cash position, operating activities tracking customer receipts supplier payments daily operations, investing activities monitoring asset purchases sales currency gains, financing activities recording loans capital dividends, advance payment handling showing customer vendor advances separately, account tags categorizing transactions by cash flow type, automatic updates reflecting posted journal entries real-time, unclassified activities capturing transactions needing categorization, reconciliation integration ensuring bank statement alignment, and closing balance calculating period-end cash position—providing complete cash visibility distinguishing profitability from liquidity preventing payment failures through advance warning enabling strategic planning based on actual cash not accrual accounting and identifying cash generation sources operating versus financing supporting data-driven cash management through systematic categorized cash flow reporting achieving financial stability beyond P&L profit.
Cash Flow Features: Opening balance, Operating activities, Investing activities, Financing activities, Advance payments, Account tags, Automatic updates, Unclassified tracking, Bank reconciliation, Closing balance, Real-time visibility
Understanding Cash Flow Statement
Foundation concept and business value:
Cash Flow vs Profit:
Critical Distinction:
- Profit (P&L): Revenue minus expenses accrual-based. Invoice issued equals revenue even if unpaid. Shows financial performance.
- Cash Flow: Actual cash received minus cash paid. Invoice unpaid equals zero cash despite revenue recognition. Shows liquidity position.
Example: Company sells 100K product on 90-day payment terms. P&L shows 100K revenue immediately. Cash flow shows zero until customer pays 90 days later. Profitable company can have cash crisis if receivables too high.
Cash Flow Statement Structure:
| Section | Description | Examples |
|---|---|---|
| Opening Balance | Cash at period start | Bank balance Jan 1 |
| Operating Activities | Daily business operations | Customer payments supplier bills |
| Investing Activities | Asset transactions | Equipment purchases asset sales |
| Financing Activities | Capital structure changes | Loans dividends equity |
| Closing Balance | Cash at period end | Bank balance Jan 31 |
Accessing Cash Flow Statement
Opening Report:
- Go to Accounting → Reporting → Cash Flow Statement
- Select time period (Month Quarter Year Custom)
- Report displays automatically
Report Breakdown:
Opening Balance:
Bank and cash account balances at period start. Example: Bank Account: 50,000 dollars Petty Cash: 500 dollars equals Opening Balance 50,500 dollars
Cash Flows from Operating Activities:
- Cash received from customers
- Cash paid to suppliers
- Advance payments received from customers
- Advance payments made to suppliers
- Operating expenses
Cash Flows from Investing and Extraordinary Activities:
- Purchase of equipment vehicles property
- Sale of fixed assets
- Currency exchange gains losses
Cash Flows from Unclassified Activities:
Transactions without proper account tags requiring categorization. Review this section monthly assigning tags to accounts.
Closing Balance:
Calculated: Opening Balance + All Cash Flows = Closing Balance. Should match bank reconciliation.
Account Tags
Categorization mechanism for cash flow:
Tag Types:
Operating
Day-to-day business transactions: Sales income Supplier expenses Payroll taxes
Investing
Asset-related transactions: Equipment purchases Asset sales Investments
Financing
Capital structure changes: Loans received Dividend payments Equity injections
Assigning Tags to Accounts:
- Go to Accounting → Configuration → Chart of Accounts
- Open account (e.g., Product Sales)
- Click Edit
- Scroll to Tags field
- Select appropriate tag:
- Product Sales → Operating
- Equipment Purchases → Investing
- Bank Loan → Financing
- Click Save
Critical for Accuracy: Accounts without tags appear in Unclassified Activities section. Review monthly and assign tags ensuring complete categorization for meaningful cash flow analysis.
Posting Journal Entries
Only posted entries appear in cash flow:
Creating and Posting Entry:
- Go to Accounting → Accounting → Journal Entries
- Click Create
- Configure entry:
- Journal: Miscellaneous or Bank
- Date: Transaction date
- Add lines:
- Debit: Bank Account 5000 dollars
- Credit: Suspense Account 5000 dollars
- Click Post (critical!)
Draft vs Posted: Draft entries do NOT appear in cash flow statement. Only posted entries included in reports. Common error: creating entry forgetting to post showing incorrect cash position. Always verify posted status.
Advance Payments Customer
Handling customer advance payments:
Receiving Advance Payment:
Scenario: Beth Evans pays 1000 dollars advance
- Customer initiates payment before invoice
- Payment recorded in Accounting
- Cash Flow Statement shows:
- Advance Payments Received from Customers: +1000 dollars
- Appears separately from operating activities
Applying Advance to Invoice:
- Create customer invoice:
- Product: 750 dollars
- Tax (15%): 112.50 dollars
- Total: 862.50 dollars
- Open invoice click Add button
- Select advance payment credit
- System applies 862.50 dollars from advance
- Invoice status: In Payment
- Remaining credit: 137.50 dollars
Cash Flow Impact:
After applying advance:
- Advance Payments Received: Reduces from 1000 to 137.50 dollars
- Cash Received Operating: +750 dollars (product amount excluding tax)
- Cash In Unclassified: +112.50 dollars (tax amount needing categorization)
Advance Payments Supplier
Handling supplier advance payments:
Making Advance Payment:
Scenario: Pay supplier 500 dollars advance
- Payment made before bill received
- Cash Flow Statement shows:
- Advance Payments Made to Suppliers: -500 dollars
- Negative value indicates cash paid out
Applying Advance to Bill:
- Supplier bill received:
- Product: 300 dollars
- Tax (15%): 45 dollars
- Total: 345 dollars
- Open bill click Add
- Select advance payment
- System applies 345 dollars from advance
- Bill status: In Payment
- Remaining advance: 155 dollars
Cash Flow Impact:
After applying advance:
- Advance Payments Made: Changes from -500 to -155 dollars
- Cash Paid Operating: -300 dollars (product cost excluding tax)
- Cash Out Unclassified: -45 dollars (tax amount)
Automatic Updates
Real-time cash flow tracking:
How Odoo Updates Cash Flow:
- Transaction Posted: Journal entry confirmed and posted
- Account Tags Read: System checks account tags on entry lines
- Categorization Applied: Transaction placed in appropriate cash flow section based on tags
- Report Updated: Cash flow statement immediately reflects new transaction
- Balance Calculated: Opening + Changes = Closing balance recalculated
No Manual Allocation: Unlike some systems requiring manual cash flow entry allocation Odoo automatically categorizes based on account tags. Set tags once updates happen automatically forever reducing accounting workload eliminating human errors.
Keeping Cash Flow Accurate
Best Practices:
1. Reconcile Bank Accounts Regularly:
Weekly or monthly bank reconciliation ensures cash flow statement matches actual bank balances. Unreconciled transactions indicate data entry errors or missing transactions requiring investigation.
2. Use Clear Account Names:
Descriptive names like Product Sales Revenue versus generic Sales Account improves clarity. Team members immediately understand transaction nature reducing miscategorization errors.
3. Automate Payment Follow-ups:
Configure automated reminders for overdue customer invoices. Late payments reduce cash inflow affecting liquidity. Early notification enables proactive collection improving cash position.
4. Review Unclassified Activities Monthly:
Transactions appearing in Unclassified section indicate missing account tags. Monthly review assigning appropriate tags ensures complete categorization maintaining report accuracy.
5. Analyze Cash Flow Trends:
Compare month-over-month cash flows identifying patterns. Declining operating cash flow despite stable revenue indicates collection problems or expense increases requiring management attention.
Business Planning Use Cases
Scenario 1: Equipment Purchase Decision
Question: Can we afford 50K equipment purchase next month?
Analysis using Cash Flow:
- Current closing balance: 75K
- Next month projected operating cash flow: -10K (seasonal low)
- Projected balance without purchase: 65K
- After 50K purchase: 15K remaining
- Minimum operating cash needed: 20K
- Decision: Delay purchase or arrange financing. Insufficient buffer.
Scenario 2: Identifying Cash Flow Problems
Observation: Profitable P&L but declining cash balance.
Cash Flow Analysis:
- Operating activities: -5K (should be positive with profit)
- Investigation reveals: Large customer owing 100K 90 days overdue
- Revenue recognized in P&L but no cash received
- Action: Aggressive collections focus payment plan negotiation
- Cash flow statement identified root cause P&L masked
Best Practices
Post Journal Entries Immediately Do Not Leave in Draft Status: Draft entries invisible to cash flow statement showing inaccurate cash position. Friday posting 10K supplier payment in draft leaving for Monday posting equals weekend showing 10K higher cash than reality. Post immediately or schedule auto-posting avoiding draft pileup.
Review Unclassified Activities Section Weekly Assigning Tags Promptly: Unclassified transactions accumulating monthly equals meaningless operating investing financing breakdown. Weekly review identifying untagged accounts assigning appropriate tags maintains categorization integrity preventing quarter-end tag assignment marathons.
Reconcile Cash Flow Closing Balance with Bank Reconciliation: Cash flow closing balance differing from reconciled bank balance indicates data discrepancy. Monthly verification: Cash flow closing equals bank reconciliation balance. Mismatch signals missing transactions unposted entries or account configuration issues requiring immediate investigation preventing compounding errors.
Conclusion
Odoo 18 Cash Flow Statement enables liquidity management through categorized cash tracking opening closing balances operating investing financing activities advance payment handling account tag automation and real-time updates. Provide complete cash visibility distinguishing profitability from liquidity preventing payment failures through advance warning enabling strategic planning based on actual cash identifying cash generation sources supporting data-driven cash management achieving financial stability beyond P&L profit understanding working capital dynamics forecasting cash needs and maintaining operational continuity through systematic categorized real-time cash flow reporting distinguishing cash impact from accrual accounting achieving liquidity mastery.