Xero Import & Cash Flow Statement

XeroAccruals vs. Cash
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Hengjia Chen A+ 0
Xero Import & Cash Flow Statement

This is specific for Xero because I haven't had a chance to encounter the situation in main ERP yet.

In Xero a transaction could be marked as cash or accrual basis. When import into Modano the import is based on accrual basis.

Despite opening and closing balance will tie, assume a situation the cash flow statement is very different in Xero vs Modano.

How could I add supporting calculation to bridge the gap?

Michael Hutchens A+ 189

Hi Hengjia,

You are right in noting that Modano imports both income statement and balance sheet data on an accruals basis, and we don't currently offer the option of cash basis imports, although this would be quite easy for us to add as an option.

The reason for this is that we rarely see businesses that don't want to forecast their working capital accurately - i.e. using debtors and creditors, etc. - and this would not be possible if cash basis historical data is imported, as working capital balances on the balance sheet would be ignored.

Regarding the cash flow statement, technically the Modano historical cash flow statement has to be correct irrespective of whether you're importing data on a cash vs. accruals basis, because it is derived from revenues and expenses in the P&L and movements in assets, liabilities, and equity in the balance sheet.

So while the historical classifications of cash movements may not be identical to Xero in some cases - which is usually immaterial - the calculated net cash flow movement in each period should be correct either way.

As an example, if your accrued revenue for a month was $100 and your increase in debtors was $50, Modano will assume the $100 is a cash receipt, then adjust cash receipts down by the $50 increase in debtors, thereby correctly calculating cash cash receipts for the period of $50.

If cash basis data was imported instead, the revenue would be $50 and debtors would be $0, so the result in the cash flow statement would be the same - i.e. an increase in cash (receipts) of $50.

But if the cash basis was used for importing, the historical balance sheet could not include the business's right to $50 of revenue not yet received in cash, which is quite misleading.

For this reason, we strongly recommend importing data on an accrued basis, so you can forecast your balance sheet and cash correctly.

I hope this makes sense, feel free to arrange a session with one of our team via the Support page of your Modano account if I've missed something or you'd like to discuss further.


Michael Hutchens