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Dec
01

Projecting Cash Flow Using QuickBooks

Cash Flow QuickBooks
The past two weeks we have discussed how to create a cash flow budget and how to effectively use your cash flow projections. If you are list most small businesses, chances are you are using QuickBooks. Today I’m going to teach you the tools QuickBooks has in place to help you manage your small business cash flow.

The most basic way to keep track of your cash flow in QuickBooks is by using the cash flow reports. QuickBooks offers two cash flow reports – the Statement of Cash Flows and the Cash Flow Forecast.

  • The Statement of Cash Flows shows where your money was spent. You can select various time frames to see how you spent your money. Since this report gives you a retrospect view, it’s not ideal for cash flow forecasting. However, it’s a valuable tool to allow you to see where your money went and how it was used.
  • The Cash Flow Forecast Report helps you forecast how much cash you will have by forecasting your receivables (cash inflows), your payables (cash outflows), and your bank accounts. The great thing about this report is that you are able to customize it to fit your needs. For example, you can specify the date range for your report, change the forecasting periods, and make adjustments for late paying customers. Keep in mind the information provided by this report is limited to the information you have previously posted to your QuickBooks file.

To access these reports, click on the Reports menu, then select Company & Financial from the drop down list, and then select Statement of Cash Flows or Cash Flow Forecast from the list.

Another great tool offered by QuickBooks to help small business owners with their cash flow projections is the Cash Flow Projector. Instead of being a report, it’s a tool to help you forecast your cash flows 6 weeks in advance. Keep in mind, the Cash Flow Projector tool creates cash flow forecasts based on the information you have previously posted to your QuickBooks file. The Cash Flow Projector will take you though a step-by-step process to create your forecast. To access, click on the Company menu, select Planning & Budgeting, and then click on Cash Flow Projector.

There are four steps to setting up your personalized Cash Flow Projector.

  • Determine Your Beginning Cash Balances
  • Project Your Cash Inflows (cash receipts)
  • Enter Cash Outflows (business expenses)
  • Review and Adjust Accounts Payable

Want a sneak peak? At any time you can click the “Preview” button to see what your cash flow projection looks like.

A combination of the cash flow reports and the cash flow projector tool offered by QuickBooks will help you manage your small businesses cash flows. These reports and tools will help you see when your business will have positive cash flows and when your expenses will exceed the cash you bring in. Keep in mind QuickBooks only uses the information you have already entered into your QuickBooks file. Even though these automated reports and tools are nice, make sure you are mindful of your business’ cash inflows, cash outflows, and other things that can impact your cash that are not entered into your QuickBooks file. A proactive approach while using these tools will help ensure the reports and information are as accurate and as useful as possible.

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


8 comments

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  1. Shannon Tucker says:

    Nice article — good organization, detail, and final caveat. Thanks!

    1. Michelle says:

      Thanks for the feedback!

  2. Tim says:

    Michelle,

    I am currently unemployed and when searching for a new opportunity many small businesses use QuickBooks. I haven’t had the chance to work with QuickBooks in the past and was wondering if you could recommend a free tutorial

    Thanks

    1. Michelle Edwards, CPA says:

      Hi Tim,

      I hope your job hunt is going well. Youtube is full of useful QuickBook tutorials. Intuit’s website also has quite a few resources and learning tools available. One other solution is to check out Nerd Enterprises. http://www.youtube.com/user/nerdenterprises/featured is his YouTube site. It’s packed full of great QB tutorials and learning. Keep an eye out at TrailheadAccounting.com, we currently offer one-on-one QuickBooks training and are getting ready to start group QuickBooks training sessions as a discounted price.

  3. eric raymond says:

    i need some help with using quickbooks to

    project cash flows based on various scenarios
    certain sales levels
    expected capital expenses in the future
    breaking out fixed costs and variable costs

    can you help?
    thanks

    1. Michelle Edwards, CPA says:

      Hi Eric – I would be happy to help with your QuickBooks, cash flow, and expense questions. I’ll give you a call and we’ll discuss the details. Thanks!

  4. Robert Judson says:

    Can you actually project a cash flow based on Budget numbers? I am setting up our forecast for next year on an affiliated company with income and expense numbers in the budget part of Quick Books. I have also posted balance sheet numbers for fixed assets based on when we would spend the money.

    Your comments and help are most welcome.

    bobbyj

    1. Michelle Edwards, CPA says:

      Hi Robert,

      The best way to project cash flow is by creating a budgeted balance sheet as well. The cash flow projection tools in QuickBooks are a great place to start. However, to get a full detailed picture of cash flow I would recommend creating a budget in Excel or using Budgeting software. Plan Guru is a favorite of mine since it will allow you to budget all 3 financial statements (Income Statement, Balance Sheet, and Statement of Cash Flows). The Balance Sheet & Statement of Cash Flows will help you forecast your cash flow.

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