Receivables Securitization
Surprisingly, the first financial statement to get its very own chapter is the Statement of Cash Flows. This is because nobody really understands it. This is by design.
Companies are given two choices for this statement: the direct method and the indirect method. Both methods break cash down into three groupings: operations, financing, and investment. It's in the Operations section that things differ.
The direct method works like your checkbook, beginning with the starting balance and ending with, well, the ending balance. The indirect method starts with Net Income and then backs out cash flow from operations. First of all, it reverses all the signs, so things that cost cash are positive and things that produce cash are negative. Secondly, it means that you may be reconciling with non-existent lines on the income statement. (Many income statements have an net income from operations, but not a cash flow from operations.) Finally, it's working backwards.
So what's with the title of the post? Well, it turns out that there's a certain amount of - latitude - in cash flow categorization. The book notes that a number of companies engage in receivable secrutization, in effect selling their receivables as a security. They have a record of collections, so other companies are willing to pay them now for the hamburger they'll get on Tuesday.
The problem is that the rules are unclear whether the income from that security belongs under the Financing section (because it's basically issuing debt secured by the receivables) or the Operations section (because the income eventually comes from receivables). Because of this, many companies net it our vs. increases in receivables and put it under the Operating Cash Flows. This almost certainly over-values the company, since OCF/NI and OCF/Sales, FCF/Market Cap are commonly used metrics.