One of the surprises to people who are new to business is that profit does not always result in surplus cash. To help you know when you will have surpluses and shortages of cash, Sage 50 provides a tool called the Cash Flow Manager.
To get to this tool, click on the Analysis menu at the top of the main Sage 50 window and choose Cash Flow Manager. The “Using cash flow manager” window may pop up. Review it if you want and then close it.
At the top of the screen you can set the time frame. A drop down box that lets you choose how many days or months out you want to project. The minimum is 7 days, the maximum is 12 months.
To the right is a button labeled “Change Cash Flow Settings”. This lets you make some important choices about how your projections are made:
- Projections based on: Open transactions or historical transaction.
Open transactions is the most common methods but the historical option may be helpful if you business is very cyclical. - Starting Cash: Here you can choose to whether or not you want to show inactive cash accounts.
- Expected Incoming Cash/Expected Outgoing Cash:
These two sections are only available if projecting based on open transactions. They let you choose which types of transactions should be used to project incoming and outgoing cash. The most common choices are automatically selected. There’s also an option to show or exclude invoices over 30 days past due. - Expected Receipt date based on: For incoming cash, you can choose to base your projection on transaction due date or on average days to pay. If you choose average days to pay, Sage 50 calculates the average number of days each customer takes to pay.
You can click the Update Cash Flow button to apply your settings or click Cancel to undo any changes you have made.
Back on the main window are 3 tabs: Starting Cash, Expected Incoming Cash, and Expected Outgoing Cash. Starting Cash will already be selected. You will have a list of cash accounts. You can select which accounts you want to include in your calculations. You can also add lines to run “what if” scenarios. Below that will be a table of numbers and a bar chart summarizing the current projections for cash balance, incoming cash, and outgoing cash. Any changes that you make are immediately reflected here.
Moving on to the Expected Incoming Cash tab, you will see that it looks basically like the Starting Cash tab, but instead of selecting cash accounts, you can select invoices and other transaction that you want included in your projection. You can change the amount if you expect a partial payment. Also notice that the first line is empty so that you can enter other items that you want to include in the projection that aren’t in Sage 50, such as a cash from a loan or customer deposit. To enter more than one item, click on “Add new row” at the top right.
The Expected Date here is either the due date or an estimated date based on that customer’s average days to pay, depending on what you chose in the cash flow settings. If an invoice is past its expected date, it will not be included in your projected cash. If you think it should be included, you can change the expected date to a date within your forecast time frame and check the Include box. You can also uncheck invoices that you think should not be included, such as invoices that are in dispute.
The last tab is Expected Outgoing Cash. It looks identical to the incoming cash tab and works the same way, except that it list AP and payroll transactions. If your projection is based on open items, the only payroll transactions that will show up are payroll checks that are already posted and that fall in the selected date rage. To include payroll estimates, you need to enter them manually in the top line of Expected Outgoing Cash. Click on “Add new row” to enter additional payroll or other estimates.
As you make changes on each tab, the balance in the bottom half of the window is updated immediately so you can see results for different scenarios. When you are done you can print your projections, send them to Excel, save them so you can come back to them later, or Reset to start fresh.
