In Oracle EPM, the cash flow statement is not a manually prepared report — it is a calculated output derived automatically from the balance sheet and income statement data in the consolidation application. Oracle FCCS includes a dedicated cash flow module that uses balance sheet movement calculations (change in receivables, change in payables, change in inventory, capital expenditure from fixed asset movements) to derive the operating, investing, and financing sections of the cash flow statement in accordance with either the direct or indirect method under IAS 7. When the consolidation data is correct, the cash flow statement is produced automatically without requiring a finance team member to prepare it.
Why Manual Cash Flow Preparation Is a Close Risk
The cash flow statement prepared using a manually assembled spreadsheet model — starting from the income statement and balance sheet extract and applying movement calculations — is one of the highest-risk deliverables in the period-end close. Every manual calculation creates an opportunity for error; the movements must balance back to the change in cash and cash equivalents, and when they do not, the reconciliation can consume hours of senior finance team time at exactly the point when the close deadline is most pressing.
For multi-entity GCC groups with subsidiaries in different currencies — SAR, AED, EGP, USD — the cash flow statement must also handle the effect of currency translation on cash balances, which under IAS 7 requires presenting the exchange rate effect on cash as a separate reconciling item. Getting this right in a manually prepared multi-currency cash flow statement requires careful, experienced preparation. In Oracle FCCS, the currency translation effect is calculated automatically by the consolidation engine as part of the same process that translates all other balance sheet items.
What Good EPM Cash Flow Configuration Looks Like
A well-configured EPM cash flow statement requires three conditions to work correctly. First, the balance sheet accounts must be mapped to the correct cash flow line — if trade receivables movements are not mapped to the operating activities section, they will not appear in the reconciliation. Second, the balance sheet must be complete and reconciled before the cash flow is generated — a balance sheet that does not balance will produce a cash flow statement that does not reconcile to the change in cash. Third, the opening balance sheet (the comparative period) must be correctly populated — cash flow movement calculations require two periods of balance sheet data, and errors in the comparative balances will cascade into errors in the movement calculations.
Where Cash Flow Automation Goes Wrong
The most common failure is a cash flow mapping that was correct when the application was implemented and has since been partially invalidated by changes to the chart of accounts or the balance sheet structure. When a new balance sheet account is added to the ERP — for a new financial instrument, a new lease liability under IFRS 16, or a new investment category — and the corresponding EPM cash flow mapping is not updated, that balance sheet movement is excluded from the cash flow statement. The cash flow does not balance to the change in cash, and the finance team discovers this during the close review rather than having a process that would detect the mapping gap automatically.
How Loop Wise Solutions Handles This
We implement cash flow mapping as a governed document that is reviewed and updated as part of the chart-of-accounts change management process — not only during the initial implementation. Every addition to the balance sheet accounts triggers a cash flow mapping review. This process discipline is what keeps the automated cash flow statement reliable after the implementation team has moved on.
