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Flux analysis compares account balances or period activity, flags movements for review and explains them with evidence. A worked balance sheet and P&L table shows thresholds, zero-balance exceptions and an accounts-receivable roll-forward that closes exactly.
Flux analysis explains what changed in financial accounts between two periods. For a controller reviewing September, it means comparing balance sheet balances at September 30 with August 31, comparing September P&L activity with August activity, and supporting the important movements with journals and schedules. A flagged difference starts the review; it is not the explanation.
Use the trial balances and transaction exports your finance team already has. Keep the period, entity, currency and account mapping consistent before deciding which movements matter. The month-end close checklist owns the close sequence and reconciliations; this guide owns the movement review within it.
A balance sheet is a position at a date. A P&L is activity over a period. Compare two month-end receivables balances, but compare one month's revenue with another month's revenue. Comparing a September year-to-date revenue balance with August's single-month revenue would create a difference that has no useful interpretation.
The SEC's guide to financial statements, checked October 17, 2026, explains this distinction between a balance sheet's point-in-time position and an income statement's period activity.
For seasonal businesses, the same month last year may be a better additional comparison. Keep it in a separate column and label it. A prior-month comparison, a prior-year comparison and a budget variance answer different questions.
Dollar flux = Current balance or period activity - Comparable prior balance or period activity
Flux % = Dollar flux / Absolute value of the prior amount
This page uses the absolute prior amount as the percentage denominator so the percentage sign follows the dollar movement when the prior amount is negative. If your reporting convention uses another definition, state it and use it consistently. A zero prior amount produces an undefined percentage. Sign changes and unusual debit or credit balances need review even when a percentage is available.
For this synthetic US business, the controller's review rule is absolute dollar flux of at least $50,000 AND absolute percentage flux of at least 10%. Both tests must pass. The controller also reviews suspense balances, unexpected signs, new accounts and other identified risks regardless of those thresholds.
This is an illustrative management review policy, not a standard materiality level or an audit conclusion. An OR rule would capture more accounts. Choose deliberately and record the rule with the reporting period.
Balance sheet rows compare August 31, 2026 with September 30, 2026. P&L rows compare the full months of August and September 2026. Dollar amounts are USD, rounded percentages are shown to one decimal place, and threshold tests use unrounded values. These are selected accounts, not complete financial statements; do not sum the balance sheet and P&L rows into a total.
| Account and comparison | Prior | Current | Dollar flux | Flux % | Review under this policy? |
|---|---|---|---|---|---|
| Cash: month-end balance | $400,000 | $300,000 | -$100,000 | -25.0% | Yes: both thresholds |
| Accounts receivable: month-end balance | $800,000 | $950,000 | +$150,000 | +18.8% | Yes: both thresholds |
| Prepaid expenses: month-end balance | $120,000 | $170,000 | +$50,000 | +41.7% | Yes: both thresholds |
| Accounts payable: month-end balance | $500,000 | $620,000 | +$120,000 | +24.0% | Yes: both thresholds |
| Accrued liabilities: month-end balance | $250,000 | $230,000 | -$20,000 | -8.0% | No threshold flag |
| Suspense: month-end balance | $0 | $15,000 | +$15,000 | Undefined | Yes: risk exception |
| Revenue: monthly activity | $2,000,000 | $2,100,000 | +$100,000 | +5.0% | No: percentage test fails |
| Payroll expense: monthly activity | $700,000 | $770,000 | +$70,000 | +10.0% | Yes: both thresholds |
| Software expense: monthly activity | $80,000 | $130,000 | +$50,000 | +62.5% | Yes: both thresholds |
The $100,000 revenue movement fails the percentage test even though it passes the dollar test. The $15,000 suspense movement receives review despite failing the dollar threshold. A threshold policy is a way to focus attention, not permission to ignore an identified problem.
The signs describe movement only. A higher cash balance is an increase; a higher payable balance is also an increase. Neither the sign nor the account name alone proves whether the movement is favorable. Payroll could rise because of planned hiring, and a cash decline could fund an approved investment.
For receivables, the reviewer obtains the invoice, receipt and credit-memo schedules for September. The example assumes no write-offs, foreign-exchange effects, reclassifications or other movements. Positive amounts below increase receivables; negative amounts reduce them.
| Receivables roll-forward | USD | Evidence |
|---|---|---|
| Opening balance, August 31, 2026 | $800,000 | Closed prior-period balance |
| Invoices posted in September | +$2,100,000 | Invoice schedule tied to the control account |
| Cash applied to receivables | -$1,930,000 | Applied-receipts schedule |
| Credit memos applied | -$20,000 | Credit-memo schedule |
| Expected closing balance | $950,000 | Opening plus all listed movements |
| Reported closing balance, September 30, 2026 | $950,000 | Current trial balance |
| Unexplained residual | $0 | Reported less expected closing balance |
Expected closing receivables = Opening receivables + Invoices - Applied cash - Credit memos
Unexplained residual = Reported closing receivables - Expected closing receivables
The arithmetic is $800,000 + $2,100,000 - $1,930,000 - $20,000 = $950,000. The $150,000 flux also equals $2,100,000 - $1,930,000 - $20,000. Both routes arrive at the same movement.
Useful commentary is: “Receivables increased $150,000 to $950,000. September invoices of $2,100,000 exceeded applied cash and credit memos of $1,950,000. The movement reconciles with no residual. Collections owns the aging review to distinguish normal billing timing from overdue balances.”
That explains how the balance moved. It does not establish that customers paid late or that the closing balance is fully collectible. Those conclusions need the aging, due dates, dispute evidence and the controller's assessment. A movement bridge also does not replace the separate subledger-to-ledger reconciliation.
| Flag | Review owner | Supporting question |
|---|---|---|
| Cash decline | Treasury | Which receipts and payments explain the movement, and do bank reconciliations agree? |
| Receivables increase | Credit and collections, reviewed by the controller | Is the increase current billing, overdue debt, unapplied cash or another supported cause? |
| Prepaid expense increase | Account owner, reviewed by accounting | Do additions and releases tie to the contract and amortization schedules? |
| Payroll increase | Finance partner with payroll | Do headcount, pay rates and timing support the change? |
| Suspense balance | Named clearing-account owner | Which entries remain unresolved, and when will each be resolved? |
For a budget comparison or the price, volume, rate and usage splits, use the existing variance analysis method. Flux should send the reviewer to that analysis when needed rather than treating every movement as a new calculation method.
The comparison changes scope. A new entity, reclassified account or different currency basis can create an apparent movement. Show a comparable basis or a separate scope bridge before writing operating commentary.
Thresholds run on signed values. A test for “greater than $50,000” misses a $100,000 decrease. Use absolute dollar and percentage values for the review flag, while preserving the original signs in the report.
A zero denominator becomes zero growth. New balances need a separate rule. “Undefined” is more useful than an invented percentage.
The explanation merely repeats the change. “Receivables increased because receivables were higher” adds nothing. Name the supported movements, evidence, unresolved amount and owner of the next question.
Netting hides an unusual entry. A small net change can contain large offsetting postings. Review identified risks and unusual journals even when the closing account passes the threshold screen.
A closed bridge is treated as proof of accounting treatment. Arithmetic agreement does not validate recognition, valuation or classification. Those judgments and approvals stay with the controller and account owners.
Keep the comparison dates, threshold rule, movement schedule and reviewer status with the commentary. Covirage's tools compute every figure and check the rollups from supplied exports; the external AI model explains the computed results. The account owner verifies the evidence and accounting judgment. A file-based review can begin with the trial balances and schedules your desk already has, without a data team.
See cost and variance analysis for the finance workflow. Related reading: the month-end close checklist for where this review sits, and variance analysis for explaining a budget difference by driver.
It is a review of changes in accounts between periods, often during the monthly close. The reviewer identifies movements that need an explanation, checks journals and supporting schedules, and documents the cause, unresolved items and responsible owner.
Flux analysis commonly means a period-to-period account movement review. Variance analysis also covers actual versus budget or standard and can split a difference into price, volume, rate or usage. They overlap, so label the baseline and method instead of relying on the name.
Use thresholds agreed by the controller for the purpose of the review. For example, review movements of at least $50,000 and at least 10 percent, plus separate risk exceptions. Those values are illustrative policy choices, not universal accounting or audit requirements.
The dollar movement is still current less prior, but percentage change is undefined. Mark it as such and review the account using a dollar or risk rule. Do not convert an undefined percentage to zero and let the account disappear from review.