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Difference between Cash Flow and Fund Flow

  • Last Updated : 22 Dec, 2020

Prerequisite – Cash Flow Forecasting | Software Engineering

1. Cash Flow :
Cash flow refers to the concept of inflow and outflow of cash and cash equivalents during a particular period. In cash flow cash from the operations is calculated. It is useful for short term financing. It starts with opening and closing balance of cash and deals only with cash and it shows causes for changes in cash. So it is based on cash basis of accounting.

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2. Fund Flow :
Fund flow refers to the concept of financial changes in working capital over a period of time. In fund flow fund from the operations is calculated. It is useful for long term financing. In this there is no opening or closing balances and it deals with all components of working capital and it shows causes for changes in net working capital. So it is based on accrual basis of accounting.





Difference between Cash Flow and Fund Flow :

S.No.CASH FLOWFUND FLOW
01.Cash flow refers to the concept of inflow and outflow of cash and cash equivalents during a particular period.Fund flow refers to the concept of financial changes in working capital over a period of time.
02.In cash flow cash from the operations is calculated.In fund flow fund from the operations is calculated.
03.Cash flow shows the position of the business in the short term position.Fund flow shows the position of the business in the long term position.
04.Cash flow changes is mainly analyzed in periodic like monthly, quarterly or as required by the business.Fund flow changes is mainly analyzed in between the previous year and the current year.
05.The basis of the statement in accounting is based on cash.The basis of the statement in accounting is based on accrual.
06.It is a part of financial statement.Where as fund flow is not a part of financial statement.
07.It is used for cash budgeting.It is used for capital budgeting.
08.It has three sections i.e. Cash flow from Operating, Financing activities and Investing.It has two sections i.e. application of fund and sources of fund.
09.Cash flow reporting is mandatory for companies to report as per GAAP.Fund flow reporting is not mandatory, but can be made internally.

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