Cash Movement

What is Cash Movement?

Cash Movement tracks actual money flowing in and out of your business. Unlike invoice creation (which is about what customers owe), cash movement is about actual payment transactions - when money physically moves from customer accounts to your bank account, or from your account back to customers.

These transactions affect your cash position and bank balance.

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Transaction Types

Payments Received

Customer payments (online and offline) applied to invoices.

When it appears: When customers pay their invoices

Affects:

• Cash - Online Payments: Money received via credit card, PayPal, Stripe (positive)
• Cash - Offline Payments: Money received via check, wire transfer, cash (positive)
• Customer Balance: Credits or prepayments applied (varies)
• Account Receivable: Amount no longer owed by customer (negative)

Examples: Customer pays $110 invoice with credit card, customer sends check for outstanding balance, ACH payment received

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Refunds Made

Money returned to customers for canceled or refunded transactions.

When it appears: When you issue refunds to customers

Affects:

• Cash: Money returned (negative)
• Customer Balance: Credits issued (varies)
• Deferred Revenue: Service no longer owed (positive adjustment)
• Recognized Revenue: Previously recognized revenue reversed (varies)

Examples: Subscription canceled and refunded, duplicate payment returned, dissatisfied customer receives refund

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How Cash Movement Works

Payment Flow Example

Invoice Created:

Customer owes $110 for subscription
- Account Receivable: +$110
- Deferred Revenue: -$100
- Taxes: -$10

Payment Received:

Customer pays with credit card
- Cash - Online Payments: +$110 (money in bank)
- Account Receivable: -$110 (customer no longer owes)
- Net effect: Cash replaces receivable

Complete Picture:

Refund Flow Example

Original Transaction:

Customer paid $110 for annual subscription
- Cash: +$110
- Deferred Revenue: -$100
- Taxes: -$10

Customer Cancels After 3 Months:

Refund issued for remaining 9 months = $82.50
- Cash: -$82.50 (money returned)
- Deferred Revenue: +$75 (9 months × $100/12, no longer owed)
- Taxes: +$7.50 (tax portion refunded)

Final Result:

• Customer got $82.50 back
• You kept $27.50 for 3 months of service delivered
• Accounting reflects the partial service delivered

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Cash vs Accrual Accounting

Understanding the difference between when invoices are created vs when money moves:

Accrual Accounting (Revenue Streams)

• Records when invoices are created
• "Customer owes us money"
• Affects: Account Receivable

Cash Accounting (Cash Movement)

• Records when money actually moves
• "Money in/out of bank account"
• Affects: Cash

Example Timeline:

Key Point: The invoice appears in October's "Revenue Streams" row (when created), but the payment appears in October's "Payments Received" row (when paid). If customer pays in November, the payment appears in November's report.

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Common Questions

What's the difference between Account Receivable and Cash?

• Account Receivable: Money customers owe you (invoiced but not yet paid)
• Cash: Money you have in your bank account (actually received)

Think of it like an IOU:

• When you create an invoice → you hold an IOU (Account Receivable)
• When customer pays → you trade the IOU for cash (Cash increases, Account Receivable decreases)

Why do payments and invoices appear in different months?

A: Invoices appear when created, payments appear when received. If you invoice on October 30 but customer pays November 5:

• Invoice appears in October Revenue Streams
• Payment appears in November Payments Received

What if a customer overpays?

A: Overpayments typically create a positive Customer Balance, which can be applied to future invoices or refunded. This appears in the "Customer Balance" column.

How do I reconcile payments with my bank account?

A: The "Cash - Online Payments" and "Cash - Offline Payments" columns should match your bank deposits:

• Online: Check your payment processor (Stripe, PayPal)
• Offline: Check your bank deposits (checks, wires)

Note: Payment processor fees may cause small differences.

What about partial refunds?

A: Partial refunds appear in the "Refunds Made" row with the partial amount. The system proportionally adjusts Deferred Revenue, Recognized Revenue, and Taxes based on what portion was refunded.

Can I see individual payment transactions?

A: Yes! If you have the appropriate permissions, use the download icon next to "Payments Received" or "Refunds Made" to export detailed transaction data.