Close & reporting
Cash flow statements
A statement of cash flows built from a Hong Kong company's actual accrual books, showing where cash came from and went across operating, investing and financing activity, including the timing of provisional Profits Tax payments that a bank balance alone never explains.
Management report
Illustrative client · August 2026
HKD
| Line | Aug | Jul | |
|---|---|---|---|
| Revenue | 142,380 | 131,904 | +10,476 |
| Cost of sales | (51,260) | (48,115) | (3,145) |
| Gross profit | 91,120 | 83,789 | +7,331 |
| Payroll | (46,300) | (45,900) | (400) |
| SoftwareNoted | (6,480) | (5,490) | (990) |
| Rent | (8,000) | (8,000) | 0 |
| Other operating | (9,215) | (9,870) | +655 |
| Net income | 21,125 | 14,529 | +6,596 |
Reviewer's note
Software is up on last month after two seats were added mid-month. Revenue includes one milestone invoice that will not repeat next month.
Illustrative. An example of the document, not a client's figures.
Why a bank balance is not enough
Today's bank balance tells you what is there, not why it moved or where it is heading. A statement of cash flows, built from the accrual books rather than the bank feed alone, separates operating, investing and financing activity so the real drivers are visible.
A Hong Kong-specific timing point
Hong Kong's provisional Profits Tax is payable in two instalments: 75% due with the final tax payment for the prior year, and the remaining 25% due about three months later. A cash flow view that flags both instalment dates ahead of time avoids a Hong Kong company being surprised by a large tax outflow landing in the same month as payroll or a supplier payment run.
What the statement shows
A monthly statement of cash flows, using the direct or indirect method, a reconciliation of net income to operating cash flow, and notes on the largest swings across operating, investing or financing activity that period.
Cash position against a forecast
The statement is tracked against a rolling weekly or monthly cash forecast, so a Hong Kong company with seasonal trading or lumpy customer payments can see a shortfall coming rather than discover it at the bank.
Method used
Most monthly reporting uses the indirect method starting from net income. The direct method is used when a lender or investor specifically asks for it.
Where it fits
Cash flow statements complete the set alongside management reports and budget vs. actual, all built from the same monthly close.
Questions
Frequently asked questions: Cash flow statements
Isn't our bank balance enough to know our cash position?
A bank balance tells you today's number, not why it moved or where it is heading; a cash flow statement and forecast show both.
How does provisional Profits Tax affect our cash flow?
It is payable in two instalments, 75% with the prior year's final tax payment and the remaining 25% about three months later, and both dates are flagged in the cash flow view ahead of time.
Can the statement flag a cash shortfall before it happens?
Yes, when tracked against a rolling weekly or monthly forecast, which is useful for a Hong Kong company with seasonal trading or uneven customer payment timing.
Which method do you use to build the cash flow statement, direct or indirect?
The indirect method, starting from net profit and adjusting for non-cash items and working capital movements, is standard for most Hong Kong companies and is what your auditor will expect to see behind the statement.
Can the statement separate cash tied up in Hong Kong from cash held offshore?
Yes, where your bank accounts and entity structure already distinguish them. That split is useful for a company weighing whether cash held outside Hong Kong can actually fund a Hong Kong obligation without moving it across the border first.
Isn't my bank balance enough to know my cash position?
A bank balance tells you today's number, not why it moved or where it is heading; a cash flow statement and forecast show both.
Direct or indirect method, which do you use?
Most monthly reporting uses the indirect method starting from net income; we use the direct method when a lender or investor specifically asks for it.
What software works with cash flow statements?
Cash flow statements runs inside Google Sheets or Excel, whichever you already use. If you are not yet set up in either, we can configure a file in your name so you keep ownership of it once the engagement is under way.
How do we get started with cash flow statements?
Getting started with cash flow statements begins with a short review of your current records and software access. Once that is done we confirm scope and timing in writing, and ongoing work begins on the schedule agreed with you.
Related services
- Close & reportingBudget vs. actualActual results lined up against the budget every month, with the gap explained in plain language rather than left for you to work out on your own.
- Close & reportingManagement reportsMonthly profit and loss, balance sheet and cash flow packaged with a plain-English narrative so the numbers explain themselves before anyone has to ask a question.
Industries
Next step
Talk to the team that would run your books
A short call covers your setup, your software and what a first month would look like. You get a written scope and price after it.