Cash Flow Tools in QuickBooks


Many businesses find that sales are sometimes slower in July and/or August- spring projects are complete, people are on vacation… That can mean a slowdown in cash flow.  Here are 5 tools in QuickBooks that can help you monitor your cash flow.

  1. Cash Flow Forecast (Reports>Company & Financial) – This assumes your customers pay timely as do you.  While that may not always be the case, this is a quick tool.  If you don’t enter your payables, this report will give you a very lopsided projected balance!
  2. Cash Flow Projector (Company>Planning & Budgeting).  Most businesses find fluctuations in their cash flow, so this tool lets you account for known income or expenses you expect in the 6 weeks that might be out of the norm (e.g. quarterly insurance payment, big deposit for a new job starting…)
  3. Balance Sheet Ratios – I find many businesses ignore reviewing their balance sheet and think it’s not useful, but it can very helpful in many ways, including warnings about heading into tough financial situations if you’re not careful!  You can take a quick look to see how your cash balance and receivables compare to payables and debt.  But there are two ratios you can easily get from your balance sheet that are worth reviewing.  Your accountant can help you determine if yours is healthy and/or similar to others in your industry.
    1. Current Ratio – How easily can you pay your debts? For a true picture, you will want to include the “current portion of long-term debt”.  In other words, if you have 4 years left on a loan, move 12 months of principle from long-term liability to current liability.  (Your accountant or lending institution could help you determine this number if you need assistance.) This can be a substantial dollar amount depending on the number and size of your loans.  But even if you don’t do this, it can still be a good eye opener.  Simply divide your Total Current Assets by your Total Current Liabilities (both shown in blue below).  In this example, you would take 201,064 divided by 33,545.
    2. Debt Ratio – What percentage of your business is financed by debt? To get this ratio, divide Total Liabilities (debt) by Total Assets, both shown in red below.  In the example below, you would take 420,512 divided by 201,064.5
  4. Income Tracker – The Income Tracker focuses on money coming in using your “sales” tools – open estimates and sales orders (indicating future sales).  Unbilled time and expenses suggesting you need to invoice! And then you view Open Invoices, past due Invoices and recent payments.   If you don’t see the icon on your toolbar, it can be found in the Customer menu.
  5. The Company Snapshot – Still one of my favorite features in QuickBooks. You can check on payables (very important for cash flow), receivables, account balances, reminders, trends in income and expenses and much more – all in one place.  You can choose from 12 possible reports, organize them any way you want and choose the time frame from the drop-down menu (no custom dates). Past due invoices and bills show up in red, making it easy to pick them out.  You can even print the snapshot.  You can also click on the payments tab to see who’s paid you recently.  If you don’t see this on your toolbar, you can find it in the Company menu.

Hopefully you’re cash flow is in good shape, but these tools can be very useful.  I’d love to hear which one(s) you like best!

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