Cash Flow Forecast - Cashbook

Cash flow planning has two distinct flavours:

Short-term cash flow, needed by you to make sure you are in funds. This looks forward only a few weeks, you may well revise it daily (at the minimum, once a week). You may well use a spreadsheet for this at the moment.

Long-term cash flow, as requested by the bank manager to check your overdraft or financing needs. This usually looks forward for a whole year, you revise it perhaps once a year, and you probably use a spreadsheet program to prepare it.

The cash book Cash Flow Forecast is designed for the first of these categories. Its purpose is to allow you to predict how cash flow could fluctuate, its predictions based on your view of when you expect to receive cash and need to pay your liabilities. It helps you to manage your cash, and highlight any potential short-term crisis.

To start a cash flow model you can automatically, if you wish, import transaction data from the nominal ledger, cash book, sales and purchase ledgers. From this you can view how your bank balance is likely to fluctuate based on your present creditor and debtor files.

Once you have created a cash flow model from such data, you can them modify the transactions in the cash flow, particularly the dates on which you expect to receive cash or write cheques. You can add extra items you know will affect cash flow, like payroll, PAYE and NI, VAT payments, and cash banked (retail).

Daily you can amend the cash flow with what has actually happened, and add or change any items which will affect the future cash flow. Then you can study the picture it gives you, and decide if you have to make any contingency plans. You might try to delay or split a large payment, showing this in the cash flow to see what it does. You might have to put extra pressure on overdue customers, or even offer an incentive for prompt payment.

Using the Cash Flow Planning Function

First you are offered a menu of cash flow definitions. Up to 32 cash flow forecasts may be maintained on the system, to cater for different bank accounts and for different plans. If you choose one which exists, then it is opened for you. If you want to delete a cash flow then, providing you are set as being the top authority level (0), then you can use the <F6> key to delete an entry. If you want to amend the title or bank account of a forecast use the <F7> key.

Starting a New Cash Flow

If you want to start a new cash flow definition, then choose a blank entry from the list and either click with the mouse or press the <Enter> key. When you do so you are asked:

The title you enter here becomes the menu name for this new cash flow. Enter a specific bank account (<F4-select> is available) or leave the code blank if you wish to use the cash flow planning function on an account unrelated to the cash book.

You can load up the cash flow definition with data from the bank account, from cash book automatic postings, and from transaction data in the sales and purchase ledgers. You can only load such data into an empty definition, however, and not into one already containing data.

Cash Flow Options

The options available to you are:

Update – allows you to update existing entries and add new entries to the cash flow.

Print – prints the cash flow definition

Load New Data – imports details from the nominal, cashbook, sales and purchase ledgers but only if the cash flow is empty

Save – saves the working cash flow

Clear Sel. – clears selective entries from the forecast

Clear All – clears all entries from the forecast

Exit – returns to the menu.

Load New Data

Although not the first option in the list, when you create a new cash flow you are likely to run this option first as it allows you to import details from the nominal, cashbook, sales and purchase ledgers. If your forecast is not empty then you are warned that proceeding will clear any existing data – proceed as required.

Choose the period number from which to start. Usually this would be the current period, but if you are starting to plan for next month’s cash flow, you might give that period number instead.

The period starting date is shown, and you can decide how far forward you wish to plan by giving an ending date. The normal period-end date is shown, but you could use and earlier data, or a later date if you want the cash flow to look further ahead.

Now you can decide which data to import into the cash flow worksheet. The bank account data (if forecast is linked to an account) is taken from the nominal ledger and will include an opening balance, plus any transactions which have already been entered through the nominal ledger or cash book. Auto postings are those from the cash book – you might want to enter these because they are (presumably) going to hit your bank during the period.

Whether or not you copy data from the sales and purchase ledgers depends on your particular business and how you run it. If you set these options for import then an entry is made in the cash flow for every invoice due to be paid in the date range covered by the forecast.

If you raise volumes of sales invoices, then to carry over each and every invoice could make the forecast tedious to manage. You might prefer to enter manually a daily or weekly estimate of your bankings. Similarly, you may not want to enter every outstanding purchase invoice into your forecast either.

Update Cash Flow

Selecting the UPDATE option takes you into the cash flow forecast – you can scroll up/down using the arrow keys and the <Page-Up> and <Page-Down> keys. To amend an entry – perhaps to change a date – press <Enter> to select the transaction and then amend the details, if you change the date then on return to the list the entries are re-sorted so you can see the new cash flow. To delete an entry press the <Del> key, to add a new entry press the <Insert> key.

Entries that come from the nominal ledger and have already been posted are marked with an asterisk in the ‘flag’ field. You can use the flag field for any other purpose to differentiate entries in the work sheet.

Finally, you can use the <F5> key to copy a current entry and change it’s details. For example, you may have agreed to phased payments from a particular customer over a number of weeks. Once you’ve entered the first you can copy the details for the next three just changing the due dates expected.

<ESC> takes you out of the transaction list and back to the cash flow options.

Print

At any time you can print all, or a selected part, of the forecast to the printer for reference.Selecting this option prompts you for a date range to output – leave blank for all – before asking for the print device to output the report to.

Save

When you are happy with a particular cash flow model, you can save it away by choosing this option.

Clear Selection

The cash flow worksheet is a dynamic model, and every now and then you will want to clear old entries for clarity. This option allows you to choose a date up to and including which all entries are to be deleted. There are replaced by a single entry showing the balance at that date to carry forward in the cash flow.

Clear All

This clears all the data from the cash flow worksheet.

Exit

Returns you to the menu, if you haven’t saved your latest changes you are warned and you choose to save or abandon as required.