Cash flow forecasting is an essential tool for any business to effectively manage its finances. It allows companies to predict and plan for their future cash inflows and outflows, enabling them to identify potential financial challenges and opportunities. Cash flow forecasting involves analysing past and current cash flow trends and projecting them into the future based on various assumptions and business scenarios.
By forecasting their cash flow, businesses can anticipate cash shortfalls or surpluses, plan their investments, and make informed decisions on borrowing, financing, and investment strategies. It also helps them manage their working capital and maintain a healthy cash balance, which is crucial for their ongoing operations and growth.
What Do You Need to Create an Accurate Cash Flow Forecast
Effective cash flow forecasting requires accurate and up-to-date financial data, including cash receipts, payments, and other financial transactions. Businesses can and should be leveraging modern technologies and software solutions to automate and streamline their cash flow forecasting processes, to enable them to get a real-time view of their cash position and make timely decisions.
With the right tools and techniques in place, cash flow forecasting can help businesses identify potential risks and opportunities in their financial operations, enabling them to take proactive steps to mitigate risks and optimise their cash flow management. Overall, effective cash flow forecasting is critical to the success of any business, providing the financial visibility and insights needed to achieve sustainable growth and profitability.
Understanding NetSuite's Native Cash Flow Management Features
NetSuite's Standard Cash Flow Management Features
The NetSuite cash flow management tool offers a range of features designed to help businesses manage their finances effectively.
Cash Flow Forecasting
NetSuite's cash flow forecasting feature provides businesses with a range of forecasting models, including direct, indirect, and operating cash flow methods. This feature allows businesses to create forecasts based on historical data, projected sales, and expenses, providing an accurate picture of future cash inflows and outflows. The forecasting data can be easily adjusted, allowing businesses to plan for different scenarios and make informed decisions.
Cash Flow Statement Generation
The native cash flow management tool in NetSuite generates cash flow statements that are essential for monitoring a company's financial health. These statements provide a clear breakdown of cash inflows and outflows over a specific period, enabling businesses to identify trends and potential issues. The tool offers a range of customisable templates for cash flow statements, providing businesses with the flexibility to tailor their statements to their specific needs.
Customisable Dashboards and Reports
NetSuite's cash flow management tool offers customisable dashboards and reports that provide businesses with valuable insights into their cash flow performance. The dashboards and reports can be customised to show the most relevant metrics, such as cash balances, cash receipts, and cash disbursements. This customisation allows businesses to focus on the metrics that are most important to their operations and make informed decisions quickly.
"With Cashflow Plus, businesses can leverage the power of NetSuite to gain greater accuracy and control over their cash flow management,"
- Chris Hatton, Customer Success Director at PKF Digital.
Advanced Features
In addition to its core cash flow management features, NetSuite's tool also offers several advanced features that can further enhance businesses' financial management capabilities.
Multi-Currency Support
NetSuite's cash flow management tool supports multi-currency transactions, enabling businesses to manage their cash flow across multiple currencies. This feature allows businesses to accurately track their cash balances and cash flows in different currencies, reducing the risk of errors and delays.
Cash Positioning
The cash positioning feature in NetSuite's cash flow management tool provides businesses with a clear view of their cash position, allowing them to optimise their cash balances and manage their working capital more effectively. This feature enables businesses to determine the most effective cash management strategies, such as investing excess cash or paying down debt.
Budgeting and Planning
NetSuite's cash flow management tool offers budgeting and planning capabilities, allowing businesses to set and monitor their financial goals and track their progress over time. This feature helps businesses manage their cash flow more effectively by enabling them to identify potential issues and opportunities for improvement.
What-if Scenarios
The what-if scenario feature in NetSuite's cash flow management tool enables businesses to simulate different cash flow scenarios, providing them with insights into the potential outcomes of different decisions. This feature allows businesses to plan for different contingencies and make informed decisions based on the most likely scenarios.
Cash Flow Analytics
NetSuite's cash flow management tool offers advanced analytics capabilities, allowing businesses to analyse their cash flow performance and identify trends and opportunities for improvement. This feature enables businesses to make data-driven decisions and optimise their cash flow management processes.
Integration with Other Systems
NetSuite's cash flow management tool can be integrated with other systems, such as ERP and CRM systems, enabling businesses to streamline their financial operations and improve their overall efficiency. This integration provides businesses with a more complete view of their financial data and enables them to make informed decisions based on real-time data.
Gain Transparency Over Your Cash Flow Position with Cashflow Plus by PKF Digital
Cashflow Plus is a powerful tool that, when used in conjunction with NetSuite, can provide businesses with a clear understanding of their cash flow position. With Cashflow Plus, businesses can access historical cash flow data, identify trends and patterns in their cash flow performance, and make informed decisions about cash flow management strategies.
Historic Cash Flow Trends
Cashflow Plus provides businesses with access to historical cash flow data, allowing them to identify trends and patterns in their cash flow performance. This data can be used to inform cash flow forecasts and make informed decisions about cash flow management strategies.
Current Day Positions and Balances
Cashflow Plus connects with NetSuite to provide businesses with up-to-date information on their current cash positions and balances. This real-time data enables businesses to make informed decisions quickly and respond to changes in their cash flow position.
Forecasting
Cashflow Plus allows businesses to create cash flow forecasts based on historical data, projected sales, and expenses. These forecasts can extend to any duration, providing businesses with a clear picture of their cash flow position over time.
Automation
Cashflow Plus automates all parts of day-to-day cash flow reporting and forecasting. The tool connects with other cash flow data sources, such as banks, to provide businesses with a comprehensive view of their cash flow position. This automation saves time and reduces the risk of errors in cash flow management processes.
"By automating cash flow forecasting and reporting, Cashflow Plus helps businesses save time and reduce errors in their financial management processes,"
- Chris Hatton, Customer Success Director at PKF Digital
Automating Short-to-Medium-Term Cash Forecasts with Cashflow Plus
Cashflow Plus offers automation of short-to-medium-term cash forecasts, which can help businesses optimise their cash flow management strategies. Here's a closer look at this feature:
Short-Term Cash Forecasting
Using Cashflow Plus with NetSuite, businesses can create detailed short-to-medium-term cash flow forecasts, typically extending from four to six weeks. This forecasting is based on AP and AR data captured from NetSuite, which is used to predict cash inflows and outflows over the forecast period. By accurately predicting future cash positions, businesses can make informed decisions about cash flow management strategies.
Medium-Term Forecasting
Cashflow Plus also allows businesses to customise their cash flow forecasting process by setting up rules and thresholds for cash management. This means that businesses can create automated alerts when certain cash balance thresholds are met or exceeded, enabling them to take proactive steps to manage their cash flow. With this customisable feature, businesses can streamline their cash management and reduce the risk of cash shortfalls or overages.
Managing Expected Incoming Cash from Customers
Cashflow Plus provides businesses with customer collection forecasts, which can help improve cash flow management. Here's a closer look at this feature:
Accurate Customer Collection Forecasts
Using Cashflow Plus with NetSuite, businesses can benefit from highly accurate customer collection forecasts. Cashflow Plus analyses historic AR data in NetSuite to learn the payment behaviour of each customer. This learning is then used to adjust the payment dates on outstanding invoices to create highly accurate collection forecasts. By predicting customer payment patterns with greater accuracy, businesses can better plan their cash flow management strategies and ensure that they have sufficient funds to meet their financial obligations.
Detailed Customer Payment Profiles
Cashflow Plus also offers detailed customer payment profiles, allowing businesses to understand the payment behaviour of each customer more comprehensively. The dashboards show a range of metrics, including Days to Pay, DSO (Days Sales Outstanding), and historic payment patterns. This information can help businesses identify customers that are likely to have payment delays or issues, enabling them to take appropriate action to minimise the impact on cash flow.
“The detailed customer payment profiles offered by Cashflow Plus can help businesses identify payment issues and proactively address them, improving customer relationships and reducing financial risk,"
- Chris Hatton, Customer Success Director at PKF Digital
In Summary
In conclusion, cash flow management is an essential aspect of running a successful business, and PKF's Cashflow Plus can help businesses achieve greater accuracy and efficiency in this area. With features such as customer collection forecasts, detailed customer payment profiles, and customisable dashboards and reports, businesses can gain greater visibility and control over their cash flow, reducing financial risk and positioning themselves for long-term success.
By incorporating Cashflow Plus into their financial management strategies, businesses can better plan for the future, improve customer relationships, and optimise their cash flow management.