Yardi’s standard cash flow report is not a true cash flow statement. There’s no denying that Yardi is a powerful and extremely valuable tool. However, to produce a real estate cash flow statement in accordance with GAAP using only Yardi, you have export the income statement and balance sheets over time into Excel and then create your own cash flow statement. Building a real estate cash flow statement in Excel is a time consuming and tedious process prone to human error. Not to mention that you have better things to do than perform an automatable task!
What's the difference between the cash flow report in Yardi and a proper cash flow statement?
The out-of-the-box Yardi cash flow report lists net income first and then a list of adjustments to net income to arrive at cash flow during the period. To create a true cash flow statement that follows GAAP and SEC requirements, you must show cash flow from operating activities, cash flow from investing activities, cash flow from financing activities, and a reconciliation of the prior period cash balance to the current cash balance. Don’t forget to add a section in your report that sums the operating, investing, and financing activities and ties that to the change in cash balance for the period. Otherwise, you may have an unbalanced report that causes reporting headaches at month-end.
Why should you care about cash flow statements?
Yardi’s cash flow report will not fly with the SEC. Ideally, your firm is either already large enough to report to the SEC or will grow large enough to require SEC reporting. And even if you don’t need to report to the SEC anytime soon, having institutional reporting attracts institutional investors and owners. Plus, you will have an easier time updating your processes when you’re smaller than when your business grows in complexity! We highly recommend improving your reporting now.
The good news is that Yardi stores the data necessary for a GAAP and SEC-approved cash flow statement. You can automate the entire process with some coding and accounting know-how.
If all of this feels too scary or complicated, don’t worry. We are here to help! Reach out and we will be happy to walk you through how to automate your accounting processes.
Real Estate Cash Flow