Cashflow Forecasting

The idea of cashflow forecasting is so attractive, isn’t it? Who wouldn’t want to look into the future and know where to deploy cash and where not to. Outside of a crystal ball, cashflow forecasting is the best tool we have for predicting when cash will come in and when cash will go out…and for what purpose.

Yes, cashflow forecasting IS important, but how is it done?  Most retail accounting packages don’t have a defined ‘report’ for forecasting cashflow. In fact, I’ve been using Quickbooks for over 10 years and Xero for over 2 years and neither has a really good view of cashflow, per se.

So, how is it done?

Well, before I go into it, how it is done will depend on the frequency you want to use a cashflow forecasting tool, what degree of accuracy you can live with and who you’ll be reviewing it with.

Since we’re mostly using Xero to service our clients, I’ve only found one tool (as of this date) that syncs well with our actual accounting data and that is Floatapp.com. But rather than sing their praises or even beat them up, I’d rather describe our process and let you know what has worked, what hasn’t and how we make it work for us and our clients.

First of all, we connect the Xero data to the app.  We refresh the data on a schedule (so we’re always dealing with fresh actuals) then once we’ve got all the data into Float, we export the Float template into a Gsheet as a template.

Why move everything to GSheet?  Well, frankly, the short answer is that manipulating numbers in Float isn’t there yet. It is still slow and SAASy.  And since we experiment with new forecasted numbers for the coming month, manipulating the numbers is faster in GSheet.

Once we’ve got what we want in GSheet, we manually update Float to be what we think will happen in the next month. Not a perfect seamless process but it works for now until the SAAS tools improve.

Overall, the advantage of apps like Float is that they sync actual accounting data information directly into the cashflow forecast tool.  This way we can always have an accurate look at when the receivables and payables on the books are expected to be due.

How do you forecast your cashflow?