QuickBooks Online is a convenient, user-friendly and effective accounting tool for businesses. While the solution has many advantages and features, there’s one area where it could use some improvement: forecasting.
Fortunately, you can use a QuickBooks online forecasting tool like Cash Flow Frog to create accurate forecasts in seconds. Let’s take a closer look at how it all works.
What is a Cash Flow Forecast?
A cash flow forecast is an estimate of the cash coming into and out of a business during a certain period of time.
Forecasting helps businesses plan for the future, avoid cash shortages and put cash surpluses to good use.
If a business sees that it may run out of cash in the near future, it can take steps now to raise funds or increase sales to avoid shortages.
Cash flow forecasts typically contain several components, including:
- Opening balance
- Total receipts
- Payments
- Net movement
- Closing balance
The time period covered by a cash flow forecast can vary greatly, but 13-week forecasts are common.
Types of Cash Flow Forecasts
There are a few different types of cash flow forecasts:
- Short-term: Used to manage the business’s day-to-day cash needs. They look ahead a few weeks and typically contain a daily breakdown of cash receipts and payments.
- Medium-term: These forecasts typically span 13 weeks (although they can be for longer or shorter periods) and are very useful for liquidity planning.
- Long-term: A longer term forecast will typically cover 12 months and is the starting point for budgeting. Businesses use these forecasts for planning their long-term growth strategies.
- Mixed period: A mixed period forecast may involve a combination of the periods above. For example, a six-week forecast may also contain two-week daily cash flows and a month of weekly cash flows.
Most businesses collect forecasts on a weekly or monthly basis, and they may be either fixed or rolling.
If you’re using QuickBooks, you’ll find that the platform does have its own forecasting tool. Using the QuickBooks online forecasting tool will make it even easier and quicker to create forecasts, although it’s not a perfect solution.
What Is QuickBooks Online Forecasting Tool?
The QuickBooks online forecasting tool is an online tool that uses your QuickBooks data to create cash flow forecasts.
Using your QuickBooks data allows forecasts to be more accurate and reliable. It also automates the process to save businesses time and money.
Using the best cash flow forecasting tool for QuickBooks can benefit businesses in many ways, but it’s important to know how to use the tool properly.
How to Use QuickBooks Online Forecasting Tool?
Creating a QuickBooks Online cash flow forecast is a simple and straightforward process. QuickBooks calls this tool the “cash flow planner.”
The cash flow planner allows you to forecast money coming into and out of your business, allowing you to keep an eye on your cash flow at any given period.
Adding Income Sources
To add items for income and expenses:
- Choose Business Overview or Cash Flow.
- Choose Planner.
- Choose Add Item.
- Select whether the item is Money In or Money Out.
- Give the item a name.
- Select Save.
If you want to edit or delete items, you can do so by navigating back to the planner and choosing the item to edit it.
You can also customize your cash planner by choosing your preferences, which can include:
- The accounts that will show your cash balance and money in and money out.
- The transaction types.
- Cash thresholds.
Methods for Monitoring Cash Flow Forecasting in QuickBooks Online
There are two methods for managing cash flow using the QuickBooks online forecasting tool: direct and indirect.
Direct Cash Flow Forecasting
The direct cash flow method is ideal for short-term liquidity management. This method helps show cash movements at specific points in time.
Direct cash forecasting uses upcoming payments and receipts to create forecasts. This data is aggregated to the period of time covered by the forecast.
This method of forecasting can be used to cover periods of up to a year or more.
Indirect Cash Flow Forecasting
With the indirect cash flow forecasting method, data from balance sheets and income statements are used. This method is typically used as part of the planning and budget processes.
Should I Use the QuickBooks Online Cash Flow Forecasting Tool for My Business?
The cash flow tool from QuickBooks Online can be helpful and convenient. But should you really rely on QuickBooks Online forecasting?
QuickBooks Online has many great features and is a robust accounting tool for businesses. However, it is not without its flaws.
If you really want to manage your cash flow, create reliable and detailed forecasts, make projects and create what-if scenarios, you need something more than just the standard QuickBooks Online tool.
The good news is that QuickBooks Online can integrate with many third-party cash flow tools like Cash Flow Frog to make forecasting easier, quicker and more robust.
Why Is QuickBooks Online and Cash Flow Frog the Best Integration for You?
Cash Flow Frog expands the functionality of QuickBooks Online, allowing you to take better control of your cash flow management.
From creating a QuickBooks cash flow statement to forecasts, projections and more, Cash Flow Frog and QuickBooks Online make it easy to keep your cash flow in check.
Together, these two tools allow you to manage virtually every aspect of your business’s finances – and they do it all automatically to save you time. Minimal hands-on time means that you can focus on running your business and spending less time on administrative tasks.
What Do You Get with Cash Flow Frog?
With our QuickBooks Online simple cash flow forecasting tool, you get a wealth of features, including:
- Forecasting
- Planned vs actual results
- Projections
- Customer insights (see who pays on time and who doesn’t)
- Branded reports
- VAT/GST forecasts
- Scenario planning
- Multiple perspectives
- Consolidate entities
- More
Cash Flow Frog is a complete cash flow management and forecasting tool that easily integrates with your QuickBooks Online account. Using data from your accounting software, you can create accurate forecasts and projections in seconds.
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