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Dynamics 365 Community / Blogs / Business Central Functional Insights - By Umang / Cash Flow Forecast in Busin...

Cash Flow Forecast in Business Central- Step-by- Step Guide

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Umang Kapoor Profile Picture Umang Kapoor 17
Cash Flow Forecast in Business Central – Step by Step Guide



Introduction:
Cash flow is the lifeline of any business. No matter how profitable a company may be on paper, without sufficient liquidity to meet short-term obligations, operations can quickly come to a halt. This is where Cash Flow Forecasting becomes an essential financial management tool.
In Microsoft Dynamics 365 Business Central, the Cash Flow Forecast functionality provides organizations with a structured way to anticipate future cash positions. It helps businesses analyze the inflow and outflow of cash by considering multiple sources such as open receivables, payables, budgets, and even manual revenues or expenses.
By using this feature, finance teams can:
  • Gain a clear overview of liquidity.
  • Predict potential shortfalls or surpluses.
  • Make informed decisions regarding investments, borrowing, or operational expenses.




1. Cash Flow Forecast in Business Central: The Cash Flow Forecast feature is available under Cash Management.


 
2. Cash Flow Setup:   To configure the Cash Flow, search for the Cash Flow Setup.


 
In the Cash Flow Setup, users can specify the Automatic Update Frequency of the Cash Flow Forecast. The forecast marked with “Show in Chart on Role Center” will be automatically updated based on the selected frequency.
The available options are:
  • Daily – Updates the forecast every day.
  • Weekly – Updates the forecast once a week.
  • Never – No automatic update; manual refresh is required.
In this set up, map the cash flow accounts and no. series.



3. Create Chart of Cash Flow Accounts:

To create a new Chart of Cash Flow Account, click on “New” in Chart of Cash Flow Account list page, Card page will open and fill the required details in the card page.



4. Cash Flow Manual Expenses & Income:

In addition to cash flow data derived directly from the general ledger, purchases, sales, fixed assets, and service modules, Business Central also allows organizations to account for additional influencing factors through manual revenues and expenses.
These entries enable businesses to capture financial activities that may not be reflected in core transactions. For instance, revenues may include rental income, interest on financial assets, or injections of private capital, while expenses may consist of salaries, loan interest, or planned investments.
By planning such manual revenues and expenses over a defined period, companies can incorporate them into liquidity calculations, ensuring a more comprehensive and accurate cash flow forecast.
To create a manual expense in Business Central, select New and provide a description, such as Salaries. Specify the date to be used for the resulting cash flow entries, along with the amount. If the expense recurs, enter a date formula in the Recurrence field (for example, Monthly to register the expense each month). Finally, define the End by date to indicate the last period for which the manual expense should be recorded.
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5. Create a Cash Flow Forecast:

Navigate to the Cash Flow Forecasts page and select New to open a new forecast card. Enter a unique name and description for the forecast. Specify the sources for cash inflows, such as receivables from customers or budgets, and for cash outflows, such as payables to vendors, tax payments, or manual expenses. Users can also enable integration with G/L accounts, budgets, to ensure that the forecast reflects actual business activity.







6. Cash Flow Worksheet:

Cash Flow Worksheet can be use to calculate and update the forecast. This will allow users to analyze the projected liquidity and make informed decisions about managing cash resources.
To begin, open the Cash Flow Worksheet page from the search bar. Choose the Cash Flow Forecast users want to work with, and then click Calculate Cash Flow. In the calculation window, specify filters such as the forecast name, date range, and the sources to include (like receivables, payables, budgets, or manual revenues/expenses). Once users confirm, the system will generate entries in the worksheet showing projected inflows and outflows by period.








After validation, post the worksheet using the Register action, which updates the forecast with the new data. Finally, users can analyze results through the Cash Flow Forecast Chart or reports, which will give users a clear picture of liquidity trends and help guide financial planning.





 


7. Analyze the Forecasted Cash Flow Using Cash Flow Availability by Period:

Users can view the availability of each cash flow by period in an overview. The overview shows the individual periods in the rows, and the columns represent the categories in the cash flow. The periods can be days, weeks, months, quarters, or years. Additionally, users can select whether the amounts should be displayed as net changes or as balances at the period end dates.







Conclusion:
Managing cash flow effectively is crucial for every business, and Business Central makes this process more structured and reliable through its Cash Flow Forecast and Cash Flow Worksheet functionalities. While the Cash Flow Forecast Card helps in defining sources and setting up the framework, the Cash Flow Worksheet gives finance teams the flexibility to calculate, review, and adjust projected inflows and outflows before finalizing.
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