Learn how FINSYNC’s all-in-one accounting solution brings together all your financial information to accurately project cash flow in real-time along with what-if scenarios to help you plan for your company’s future.

By FINSYNC

Meet Sarah. She runs a small marketing agency with two employees in her home town of Smallville. The total workload fluctuates a lot, so she relies on a few trusted freelancers from time to time. 

Despite turning a profit every year, Sarah still experiences periods of cash shortages, which prevent her from hiring more employees. Even when she sets some money aside, it’s rarely enough. 

Does this sound familiar? If the answer is yes, your business would benefit from cash flow forecasting. 

Benefits of Cash Flow Forecasting

A cash flow statement provides a realistic picture of your business’ income and expenses. Forecasting can: 

  •     Help you understand how various scenarios will impact the future of the business. Including hiring, big purchases, or an increase in production.
  •     Highlight customers that consistently pay invoices late. This can help figure out if you need to change your due dates, or negotiate different payment terms with your vendors.
  •     Predict and plan for cash shortages and surplus cash.
  •     Prove your repayment ability to a lender.

In Sarah’s case, a cash flow projection might uncover that some of her clients are perpetually late with payments.

Not making a cash flow projection can, in fact, put your business at risk of failing. Around 82% of small businesses fail due to poor cash flow management and a lack of understanding how cash flow impacts their business.

Why Small Businesses Struggle to Project Cash Flow

Cash flow forecasting is time-consuming and often manual work. In order to put together a cash flow projection, you need to gather copies of invoices, paper and electronic bills from all vendors, payments made with a credit card, salaries, taxes, etc.

Even if you’re working with some sort of software, this process requires manual input. If you’re working with a spreadsheet, all of this data needs to be inputted manually.

The biggest drawback of using a spreadsheet is the need to update it regularly. Every time Sarah wants an update of current cash flow, she needs to add the new numbers and remove the old ones

Instead of doing this work manually, you can save significant time and improve accuracy by relying on software like FINSYNC to do it for you. 

How FINSYNC Projects Cash Flow

FINSYNC offers a real-time update of how your business is doing. The platform gathers financial information from your bank, payroll, accounting, invoicing, and accounts receivable, and updates the cash flow projections daily for the month ahead.  

You start by connecting all your bank accounts through FINSYNC. Based on this data, the platform sets a starting balance for any given month. To calculate the money coming in, FINSYNC pulls information from invoices and deposits made in your bank. Overdue invoices are not included in the forecast.

The money that goes out is retrieved automatically from payroll and the accounts receivable inbox in your FINSYNC dashboard. Since you can also pay your bills directly from the FINSYNC dashboard, this is also accounted for in the cash flow predictions.

A business seeing tightening cash flow models the impact of a line of credit
A business seeing tightening cash flow models the impact of a line of credit.

FINSYNC allows you to get a detailed overview of all your payments in one place. All bills and invoices from vendors have a status, so you know if they’ve been paid or not. They’re broken down by these two categories regardless of their due dates.

The data displayed in the graph provides a visual view of the month ahead. It makes it easier to see potential cash flow problems so you can make any necessary adjustments.

In addition to a monthly, graphical view of your data that helps you plan for the overall health of your business, you can also benefit from a daily calendar view. Being able to drill down specifically to the day will help you identify specific dates where you might run into cash flow issues. Often with vendor payments and payroll, a week or even a day can make a big difference.

Account for What-If Scenarios

For a cash flow statement to be valuable, it needs to be based on accurate numbers. Unfortunately, many small business owners predict their future sales incorrectly. They also fail to account for the financial impact of big decisions. For example, hiring, investment in equipment, or taking out a loan. 

To help with these issues, FINSYNC has a “what if” feature. Instead of guessing what the impact of a major decision will be, Sarah can create potential cash in or cash out situations to see how it will hypothetically impact future cash flow. She can even make multiple “what-if scenarios” and toggle them on and off to view their individual impacts.

You can customize each “what if scenario” to occur on certain dates, repeat each week or month, or simply set it as a one-time expense or income. This can help you visualize big purchases along with the impact of hiring new employees, or opening a line of credit.

With this feature, you can also quickly and easily see what a bad month would look like for you, and plan accordingly several months ahead. 

Cash flow forecasting is an indispensable tool for running a successful business, even if you’re doing it alone. FINSYNC’s all-in-one platform offers many useful features, such as payroll, which is a huge component of cash flow projection on the expense side. With FINSYNC, payroll is automatically factored into cash flow projections along with other expenses and income through invoices.

The best part is every time you create a new invoice or bill or add someone to payroll, it gets included in your cash flow projection automatically. Are you ready for a more strategic approach to your business? Start today.