Setting up the financial categories


Recording the cash flow by items will help you get a detailed financial report, thanks to which you will be able to analyze the structure of income and expenses and understand their effectiveness.

Flowlu allows you to keep track of cash flows at 2 levels: in the context of the three activities of the organization – operating, investing and financial as well as using items of income and expenses. We will describe what the activities of the organization mean.

Operating activities

Operating activities include all income and expenses related to the main activity of the company.   

Examples of financial items:   

  • income from the sales of goods (services);
  • salaries;
  • payments to suppliers;
  • office rent;
  • taxes;
  • office expenses

Investing activities

These activities include purchase or sale own assets for long–term use.

Examples of financial items:

  • own cash investments in the business;
  • sale/purchase/repair of tangible assets long–term assets (equipment, transport, office furniture)
  • sale / purchase / of intangible assets

Financial activities

These activities include any funds received from a bank or partners, enterprises and their return with interest. In other words, money that was not earned by the company itself.           

Examples of financial items:

  • obtaining loans from banks;
  • investments, borrowed funds from partners or other enterprises;
  • returns on interest;
  • cash payments on borrowed funds or loan.

For each type of activity, arbitrary items of income and expenses are set up. With the development of business, new items are added and their level of detail increases.

Grouping the company's cash flow into three types of activities significantly simplifies the analysis and allows you to see the real picture of the company financial situation.

Here is a simple example

Sales of your product are growing. By looking at this dynamics, you decide to borrow funds for the further development of the business. This money is spent on new staff and advertising. As a result, you get a positive effect, sales are growing and it seems that everything is good and that the business is developing. But in fact, the profit from sales does not cover all current expenses and you have no funds to repay the debt.

To prevent this situation to happen to your business, you need to track incomes and expenses in the context of the company's 3 types of activities.

How to set up financial items?

Go to System SettingsFinanceFinance Categories.

Here you can add and edit existing categories.

To create a new category, click the Create button in the upper right corner.

In the opened side panel enter:

  • category name;
  • category description;
  • determine the type of category – operating, investing or financial activities;
  • mark what it is – the inflow or outflow.

Save category.

To rename a category, hover over it with the mouse and click on the pencil. Categories that did not have any transactions can be deleted. To do this, click on the red cross.

To quickly change the type or activity, simply click on the Yes / No in the corresponding column. If you disable a category, it will not be displayed when creating a transaction. When you turn on the Outflow column, the category will be displayed only when creating an expense transaction. To sort categories use the Drag–and–drop method. Put at the top the frequently used ones.

Now, when you completed the setting up of categories, you can record the transactions in the system.