Forecasting Cash Flow

Cash Flow is a concern with almost all businesses. While many think, “if only I were making more…”, remember that bigger businesses have cash flow issues too – they just have more zeroes in the numbers.

QuickBooks has several tools that can help you monitor cash flow. Here are a few:

The Statement of Cash Flows (found in the Company & Financial reports), explains the change in your actual cash.  For instance, a loan payment is not an expense (just the interest), but it certainly affects your bank account, so this helps you understand where your money went.   To learn more about how to read this report, click here.

Cash Flow Forecast (Reports>Company & Financial) – This assumes your customers pay timely as do you, but it’s a quick tool.  If you don’t enter your payables, this report will give you a very lopsided projected balance!

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.

Create Forecast (Company>Planning & Budgeting).  The above is nice, but you may not want to have to go through that process weekly. If you can see a bigger picture, then you might want to create different scenarios – hire more staff, a big project comes through, a big supplier increases prices, you raise your rates……  In Premier and Enterprise, you can create forecasts. The process will be very similar to the budget, but this tool is your opportunity to play around with the numbers and see what would happen if….. 

Contractor Reports If you’re a contractor, then you definitely want your estimate (even a simplified version) in QuickBooks. I recommend Premier or Enterprise so you can take advantage of additional reporting.  Cost to Complete, Estimate vs. Actual and Committed Costs can all help you see if you’re on track and whether or not your profit margin will be higher or lower than you expected which would in turn, affect cash coming in (or going out). 

If you need help in setting these up or want to change your version of QuickBooks so you have more tools to use, let us know – we’ll be happy to assist.

I hope your cash continues to flow in well and out slowly!

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