How to create, setup and predict cash flow

 

Hello everyone, thanks for your time. My name is Christos Pittis, and I am a Microsoft Dynamics NAV Consultant. In this episode, I am going to show you how to create and setup Cash Flow Forecasts in Microsoft Dynamics NAV 2016.

Understanding cash inflows and outflows are the keys to running a successful business. You can use cash flow to create easily a short-term forecast that predicts how and when you expect money to be received and paid out by your business. It is important for you to know that your business will have enough cash to pay creditors and expenses when they fall due.

 

Open your Microsoft Dynamics NAV 2016 client, go to the Departments menu, Cash Flow, Chart of Cash Flow Accounts. You can use the one included in the Cronus demo database, or you can create a new one based on your company’s needs. In the cash flow forecast, the individual values that affect the cash flow of your company are arranged by using cash flow accounts.

The formula is quite basic: (RECEIPTS – PAYMENTS) +- CASH IN HAND

Check the Receipts section

Check the Payments section

Check the Surplus calculation

 

In this example, is 5,066,879.16 - 3,394,786.10 = 1,672,093.06

Lastly, you take into account the Cash in hand.

Total of Surplus +- Cash Flow Funds = Total Cash Flow

Consequently, the Total Cash Flow field shows the answer you are looking for a particular period of time.

Cash Flow Funds (Cash in hand) is a group of accounts taken directly from the Chart of Accounts.

Go to the Departments menu, Cash Flow, Setup, Cash Flow Setup.

 

We must establish which cash flow accounts should be used for the entries in the areas of general ledger, purchase, sales, service, and fixed assets.

Make sure you have the ACCOUNTING MANAGER role.

 

Click on the HOME menu and have a look at the Chart Flow Chart. In my example, it’s empty at the moment, and it will appear there by the end of this exercise.

Go to the Financial Management menu, Cash Flow and Cash Flow Forecasts.

 

Hit the New button on the top so to create a new one. Tab away to get a number automatically and then type into the Description field. For example, “Cash Flow Forecast 2017”.

Select the Consider CF Payment Terms check box to use the Cash Flow Payment Terms Code that is set up for a customer and the Cash Flow Payment Terms Code that is set up on a vendor. If the check box is not selected, the payment terms from the posted customer ledger entries or vendor ledger entries and the sales, service, or purchase orders are used.

Select the Show in Chart on Role Center check box to display the cash flow forecast chart on the Role Center.

Manual payments cover both manual revenues and manual expenses. In the Manual Payments From field, enter the start date from which manual revenues and manual expenses should be included in the cash flow forecast. In the Manual Payments To field, enter the last date of which manual revenues and manual expenses should be included in the cash flow forecast.

Click OK.

 

Go to the Departments menu, Cash Flow and Cash Flow Manual Revenues. Click on it.

You can record manual revenues. Manual revenues are items such as rental income, interest from financial assets, or new private capital. In the Recurring Frequency field, you can enter 1M to record the rental revenue on a monthly basis, or 3M (Quarterly basis), etc.

Go back to Cash Flow and click on the Cash Flow Manual Expenses page. You can record manual expenses. Manual expenses are items such as salaries, interest on credit, or planned investments. The same logic applies here regarding the setup options.

In this video, I am creating a manual expense so you can see how easy it is. Click on the New button on the top and create a new line. In my example, I did the following:

 

Code = ME04

Cash Flow Account No. = 1110

Description = Other Expenses

Starting Date = 01/01/2017

Ending Date = 31/12/2017

Recurring Frequency = 3M

Amount = 1,000

 

Click OK.

 

Find the Customers page, locate a customer and visit the Payments fast tab and enter a value in the Cash Flow Payment Terms Code field.

In real life, customers sometimes, delay the payments so you can put a more realistic value in that field to be included in your Cash Flow projections.

Click OK to close the Customer Card.

Go to the Departments menu, Cash Flow and Cash Flow Forecasts, select the newly created forecast and run the Cash Flow Worksheet function. Click on the Suggest Worksheet Lines button on the top and place a check mark in all options. I am excluding the Budgeting options here, but it’s a great option, and you can take it as your homework J

Click OK.

Have a look at the transactions.

In the cash flow worksheet, you register the forecasted transactions of cash inflows and outflows periodically with a batch job. You can manually edit the registered cash inflows and outflows and enter additional lines. In order to handle all this, it is important to learn to work with the cash flow worksheet.

I will scroll down do find the manual entries I have created and customer’s 10000 The Canon Group payments, based on the Cash Flow Payment Terms code.

In the end, click on the Register button at the top. The following message pops up “Do you want to register the worksheet lines?”. Click Yes to the message.

Click OK to the success message.

Go back to the HOME menu and check the Chart of Accounts Chart on your right-hand side. The Chart should be there now! Play with the filters and options to make the graphic representation meaningful for you.

Go to the Departments menu, Cash Flow and Chart of Cash Flow Accounts.

Check the Amounts column to see some numbers there against each line. Scroll down to check the last line “Total Cash Flow.”

Thanks for reading this blog post and watching my YouTube video. You can connect with me on LinkedIn https://uk.linkedin.com/in/christospittis or 365 talent portal https://www.365talentportal.com/

 

Christos Pittis

Microsoft Dynamics NAV/Dynamics 365 Business Central Consultant