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How can dashboards be used to monitor cash flow in real-time?

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Cash flow is the lifeblood of any business, but managing it can be challenging and time-consuming. How can you keep track of your cash inflows and outflows, and make informed decisions based on real-time data? One possible solution is to use dashboards, which are visual tools that display key performance indicators (KPIs) and metrics related to your cash flow. In this article, we will explore how dashboards can help you monitor your cash flow in real-time, and what features and best practices you should consider when creating or choosing a dashboard for your business.

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1 What is a dashboard?

A dashboard is a graphical representation of data that summarizes and highlights the most important information for a specific purpose or audience. A dashboard can be interactive, allowing you to filter, drill down, or zoom in on the data, or static, showing a fixed snapshot of the data at a given point in time. A dashboard can be created using various software tools, such as Excel, Power BI, Tableau, or QuickBooks, or using custom code or APIs.

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Swati Bagri

Leading FP&A at KraftHeinz | Chartered Accountant | LinkedIn Top Voice
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Imagine you’re playing a video game, and there’s a screen that shows you everything you need to know - your health, points, level, and a map. A dashboard in business or technology is like that screen. It’s a visual display that shows the most important information you need to make decisions or understand what’s happening, all in one place. Just like in your game, where you can quickly see if you need more health points or where to go next, a dashboard in a company might show how many sales they’re making, how much money they have, or how their customers feel about their products. It helps people quickly get the big picture without having to dig through tons of details.

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Swati Bagri

Leading FP&A at KraftHeinz | Chartered Accountant | LinkedIn Top Voice
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Imagine you’re playing a video game, and there’s a screen that shows you everything you need to know - your health, points, level, and a map. A dashboard in business or technology is like that screen. It’s a visual display that shows the most important information you need to make decisions or understand what’s happening, all in one place. Just like in your game, where you can quickly see if you need more health points or where to go next, a dashboard in a company might show how many sales they’re making, how much money they have, or how their customers feel about their products. It helps people quickly get the big picture without having to dig through tons of details.

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2 Why use a dashboard for cash flow monitoring?

A dashboard can help you monitor your cash flow in real-time by providing several benefits, such as visibility, simplicity, and actionability. With visibility, you can see the current status and trends of your cash flow, including cash balance, conversion cycle, receivables, payables, expenses, and income. You can also compare actual cash flow with budget, forecast, or historical data to identify any gaps or anomalies. Simplicity allows you to simplify your analysis by displaying data in a clear and concise way using charts, graphs, tables or gauges. You can avoid cluttering your dashboard with too much or irrelevant data and focus on the KPIs and metrics that matter most for your business. Actionability helps you make better and faster decisions based on your cash flow data such as adjusting pricing, billing or spending policies, optimizing working capital or seeking external financing. You can also set alerts or notifications for critical or unusual situations like low cash balance, late payments or cash flow shortages.

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Meera Nair

Driving Financial Excellence @ CogniCor
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Imagine you're a CFO at a tech startup. Instantly visualize vital metrics like cash on hand, AR, and AP. Graphical representation swiftly spots anomalies. For eg- the dashboard shows a sudden increase in outstanding invoices and you can follow up with clients to ensure timely payments. Alerts in the dashboard notify you of potential issues, such as approaching a cash reserve threshold. This proactive approach enables agile decision-making, such as renegotiating vendor terms and maintaining a robust cash position. Tailoring the dashboard to key financial metrics directly impacts the startup's financial health. Real-time visibility facilitates agile, data-driven decisions, steering the company towards sustained growth and stability.

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3 How to design a dashboard for cash flow monitoring?

Designing a dashboard for cash flow monitoring requires careful consideration, as different businesses may have different goals, needs, and preferences. To begin, you should define your objectives and audience, so that you can customize your dashboard accordingly. Afterward, you should select the KPIs and metrics that will measure and reflect your cash flow performance. This could include cash balance, cash flow statement, cash flow forecast, cash conversion cycle, receivables turnover ratio, payables turnover ratio, operating cash flow margin, and free cash flow. Additionally, you should identify and integrate the data sources that will feed your dashboard and decide how often you want to update it. Lastly, you should choose the visual elements and layout that will best convey your message and enhance the user experience. This could include line charts, bar charts, pie charts, or gauges arranged in a logical way with colors, fonts, labels, and legends.

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4 How to evaluate a dashboard for cash flow monitoring?

Once you have created or chosen a dashboard for cash flow monitoring, you should evaluate its effectiveness and usefulness by asking yourself questions such as whether it meets your objectives and expectations, provides accurate and reliable data, displays the most relevant information, offers enough detail and flexibility, has a clear and attractive design, helps you make better and faster decisions, and inspires trust and confidence. Additionally, you should solicit feedback from your audience and users to make adjustments or improvements as needed.

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5 How to use a dashboard for cash flow monitoring?

Finally, after designing and evaluating your dashboard for cash flow monitoring, you should use it regularly and effectively to manage your cash flow. It is recommended to review the dashboard at least once a week, or more often if your cash flow is volatile or unpredictable. Make sure to compare the actual cash flow with the budget, forecast, or historical data to identify any discrepancies. Additionally, analyze the cash flow trends and patterns to understand the causes and effects of your cash inflows and outflows. Afterward, take action based on your dashboard insights, such as improving cash collection, reducing expenses, or securing additional cash sources. Furthermore, communicate the dashboard results and recommendations to stakeholders, such as team members, managers, or investors. Lastly, update the dashboard as business and cash flow situation changes to keep it current and relevant.

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Monica Vasquez

| Finance Leader | Business Partner | C-Suite Support | FP&A | Budgeting & Forecasting | Management Reporting | P&L | Variance Analysis | Financial Planning | M&A | Strategic Finance | GTM Finance | Communications |
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1. Identify Key Metrics: Focus on essentials like cash, payables, and receivables. 2. Choose a Dashboard Tool & Connect: Pick Power BI, Tableau, or Google Data Studio. Link financial data for real-time updates. 3. Design the Dashboard: Use charts, graphs, and neat layouts. 4. Cash Position Overview: Summarize cash visually for quick insights. 5. Accounts Receivable and Payable: Track who owes and who you owe. 6. Expenses Tracking: Monitor spending trends and actuals versus budget. 7. Net Cash Flow: Gauge positive or negative cash flow. 8. Budget vs. Actuals: Compare and refine your financial strategy. 9. Set Alerts: Receive reminders for low cash/overdue invoices. 10. Regular Review: Schedule routine check-ins for trends and decisions.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can dashboards be used to monitor cash flow in real-time?

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1 What is a dashboard?

2 Why use a dashboard for cash flow monitoring?

3 How to design a dashboard for cash flow monitoring?

4 How to evaluate a dashboard for cash flow monitoring?

5 How to use a dashboard for cash flow monitoring?

6 Here’s what else to consider

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