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Cashflow forecasting: Take the first step


Alex Falcon Huerta reviews Fluidly’s process for transferring clients to the cashflow forecasting tool, provides a few additional cashflow 101 tips and reiterates the necessity of cashflow forecasting in an uncertain climate.

12th Aug 2020
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Cashflow forecasting is an area that most businesses owners do in their head. If business owner’s do put a forecast together, amounts are often forgotten – corporation tax, for example. But, if anything hasn't been calculated or added to the accounting software, it can be critical to the business, particularly in this period of the unknown.

During the pandemic, it became harder for business owners to know their cash position predictions for the next three months, let alone the next six or twelve months. Where we are keen to support business owners, the fact is, they need all the help they can get to be aware of the future that lays ahead. 

Will the business survive another wave of coronavirus? Knowing accurate future predictions will, ultimately, mitigate the risk of insolvency and subsequent business closure.

Moving to Fluidly: The process

Since Soaring Falcon and all its clients are fully cloud, it was a fairly simple process for us to attach Fluidly to Xero and pull in the current data during the pandemic. 

The Fluidly team had to be added as an administrator to our Xero platform, and an allocated Fluidly account manager provided the support and added all the clients. I then had to invite the clients to Fluidly. 

Before deploying the update, we sent WhatsApp messages and emails telling clients to look out for the invite. 63% of our client base is currently using it. The remaining clients have it but are choosing not to use it. 

When the invite is received, clients can access the ‘how to’ webinar and can reach out to Fluidly support. Since we were inundated with Covid emergencies, it was hard for us to give tech support to clients during the prime lockdown period. Now everything has slowed down, we are able to give more support to ensure the process and set up is correct.

Moving to Fluidly: Teething issues

It works well for the majority of our clients. 

Where clients have seasonal income – like a larger amount coming in at the end of each quarter – we had to tweak their income records to show where known lump sums would be coming in. Fluidly have now built this in as part of their new feature, which we are testing out at the moment. 

Other clients didn’t transfer quite as smoothly, and we had to move their data to a Google Sheet to carry out more complex work. In some cases, we needed to break the income down to specific projects and individual jobs, and not just rely on a ‘line’ of income in the accounting software, such as the general ‘sales’ line. 

We mainly use Fluidly’s free 3-month forecast, but some clients upgraded to the full product which offers a full 12-month forecast. The full forecast serves better for planning and organising finances for January 2021’s tax payments and gives the business owner more confidence over their cashflow position for the upcoming year. Those clients will potentially know earlier when the critical times will arise, and when they’ll need to apply for finance or funding.  

Cashflow forecasting 101

As with all forecasting, the more granular the data, the more accurate it is to the true cash position, meaning a better the forecast. At the same time, you can’t make the data too complex and overwhelming for the business owner. 

To the trained eye, a complex cashflow is easy to read but to a business owner, who potentially won’t know where to look or even where to identify key areas of concern, cashflow data can be a confusing mess of numbers. But it’s our job to help and educate them. 

Most forecasting software shows clients their cashflow in a bar graph, which is a much simpler visual representation of the data for non-accountants, making it easier to digest and focus on areas of significance. Spreadsheets full of numbers can be overwhelming and hard to interpret – so it is better to see that data behind the scenes, broken up into its separate components.  

Most clients knew that cashflow forecasting was something they needed from the start of C19. Starting or preparing a forecast is daunting and clients will look to us to support them in creating them. Having a tool that links to the accounting software automatically and does a lot of the leg work for you is important, especially in these trying times. 

Forecasting tools are easier to manage than a spreadsheet when it comes to data accuracy, as it can have incorrect formulas and are more prone to human error. Spending time on the AI tool to make sure the data is 100% accurate will mean they can see updates any time by simply refreshing, and they can add scenarios as they go along, rather than recreating a spreadsheet version that could set them up to fail from the offset.

Replies (4)

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By Munch
13th Aug 2020 09:55

This article seems to indicate that you only started using Fluidly during lockdown? With Fluidly being a well documented friend of Xero et al, would be interested to hear of some other options for simple SME business.

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Replying to Munch:
Alex Falcon Huerta
By Alex Falcon Huerta FCCA
13th Aug 2020 10:43

Hello - Ive been using Fluidly for some time, just not all clients had it. During lock down I was able to offer the starter version to all clients . A lot of tech companies stepped up and supported accountants. Most giving 3 months free. My practice has been 100% Xero from the offset. Coming from 20 years of working with desktop versions of Sage, Quickbooks , excel etc, I just preferred Xero overall to use in my practice. Today, it has the most add-on partners I can utilise to help my clients. We use over 50 different apps in the business now. Since C19, cashflow is key. Other options - Float, Pulse (not as user friendly) ..but usually I go to the xero marketplace to start with...

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By David_Lewis
13th Aug 2020 13:47


I have for a long time felt that the profession needs to do more with supporting businesses with cash flow forecasting, so the focus on this is very welcome.

A few months ago I looked at a demo of Fluidly, while I thought the credit control aspect was great and thought it would be OK for short term forecasting (Ie: a month/six weeks ahead, I did not feel comfortable that there was no P+L and balance sheet and I felt there was scope for error when applying adjustments. As someone who carries out due diligence - I'm not sure it would pass muster for 12 month planning etc - especially in an environment where past performance may bear little resemblance to the current business dynamic.

The Fluidly presentation I watched promoted it is an extra source of income for accountants, however getting cash flow forecasting wrong can be terminal (eg: the case of Conviviality plc). I just hope users are mindful of the potential pitfalls.

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By AndrewV12
14th Aug 2020 11:05

I recently prepared a cash flow forecast for a charity (Passenger Transport) though even though I am a qualified accountant, its impossible to estimate the amount of passenger fares in October 2020 and onwards, do you use gut instinct, go low or go high ........ I am looking forward to year end to see how accurate I am.

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