# Direct vs indirect cash flow

> Direct cash flow shows actual receipts and payments from the banks; indirect starts from accounting profit and adjusts it. Both reach the same cash change.

Updated: 2026-10-02 · Author: Santiago Viglione (Fibady) · https://www.fibady.com/en/glossary/direct-vs-indirect-cash-flow

Direct cash flow shows actual receipts and payments from the banks; indirect starts from accounting profit and adjusts for non-cash items and working-capital changes. Both reach the same change in cash by different routes.

## How it is calculated

Direct: Σ receipts − Σ payments, by category. Indirect: profit + depreciation ± change in receivables, inventory and payables ± investing ± financing.

## Example with numbers

Profit 50, depreciation 10, receivables up 30 (you collect less than you sell): indirect cash flow = 50 + 10 − 30 = 30. Direct must also give 30 from the period's bank movements; if not, something is missing.

## How Fibady does it

Fibady generates both: the indirect from the accounting and the direct from each bank's movements classified by concept. [Plan vs. actual](/product/budgeting) management control adds the bridge from profit to cash, to show why the cash variance is not the profit variance.

## Frequently asked questions

### Which of the two is better?

Neither: they measure the same thing. Direct is for managing treasury day to day; indirect explains why profit does not match cash.

### Must they give the same result?

Yes. The period's change in cash is a single number. If they do not reconcile, a bank movement or an accounting adjustment is missing.

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