What are the best ways to forecast and track cash flow with software?

1 Why forecast and track cash flow?

Forecasting and tracking cash flow is essential for any business, regardless of its size, industry, or stage. It allows you to see how your business is performing, how much cash you have available, and how much cash you need to cover your expenses and obligations. It also helps you identify potential cash flow gaps, opportunities, and risks, and take action to improve your financial situation. By forecasting and tracking cash flow, you can plan ahead, manage your cash flow cycles, optimize your working capital, and achieve your business goals.

2 How to forecast cash flow with software?

To forecast cash flow with software, you need to input your historical and projected data on your income and expenses, as well as any assumptions and variables that affect your cash flow. For example, you might include your sales projections, payment terms, inventory levels, operating costs, taxes, debt repayments, and capital expenditures. The software then uses various methods and algorithms to generate a cash flow forecast, which shows your expected cash inflows and outflows for a given period, such as a month, a quarter, or a year. You can also create different scenarios and compare them to see how your cash flow changes under different conditions.

3 How to track cash flow with software?

To track cash flow with software, you need to connect your software to your bank accounts, accounting systems, and other sources of financial data. The software then automatically imports and updates your actual cash flow data, and compares it to your forecast. This way, you can see how your cash flow matches your expectations, and where there are any variances or discrepancies. You can also monitor your key cash flow indicators, such as your cash balance, cash burn rate, cash conversion cycle, and cash flow margin. By tracking cash flow with software, you can spot any issues or anomalies, and adjust your forecast and actions accordingly.

4 What features to look for in a cash flow software?

When selecting cash flow software, you should consider features that meet your needs and preferences. The software should be user-friendly, intuitive, and customizable, allowing you to set up your cash flow model, input data, and generate forecasts and reports without difficulty. Additionally, the software should be accurate and reliable, utilizing proven methods and formulas to calculate your cash flow. The software should also integrate and automate data sources such as bank accounts and accounting systems. Additionally, the software should enable visualization and analysis of your cash flow data in various formats like graphs, charts, tables, and dashboards. It should also support scenario planning and forecasting of your cash flow under different scenarios such as best case, worst case, or what-if scenarios. This allows you to change assumptions and variables to compare scenarios and choose the best one for your business.