Cash flow is usually a concern for every business. Historically, ERP systems haven’t been very good at providing realistic cash flow reports. The reason is mainly because the computer assumes things happen on the day you predetermine in the system. For example, if you have an outstanding sales invoice, you’re supposed to get paid on the date due. The system will assume you’ll get the funds into the bank on that day. This is of course, not always the case. The same goes with your accounts payables.
Similarly, if you have investments being made on a schedule, you wouldn’t want to log those investments into your chart of accounts or bank before they happen, but you would want to see them on your cash flow statement.
This is the reason why Excel has been the tool of choice for CFOs managing cash flow. Although Excel is great at many things, it’s not connected to your ERP. There are solutions that allow you to connect Excel, but in my mind, it’s not the way to go. The best way to manage the process is inside the ERP, where you have access to all the data and can build logic to connect the dots.
A couple of years ago Microsoft released a cash flow specific module inside NAV. The idea is to maintain a separate cash flow ledger that is not connected to the General Ledger or any of the customer, vendor sub-ledgers. You start by creating a cash flow forecast and then suggesting entries from the sub-ledgers into a worksheet.
This makes dealing with the ever changing cash flow easier. Your AR and AP are now suggestions, which you can manipulate. You can also add manual entries. Everything is posted and recorded, so you can go over your assumptions at a later date and see if you were on the right track or not.
Finally, the system generates cash flow forecast pages and charts so you can keep up with where you’re at, helping you make sure your business has enough to run comfortably. For further information about this module, check out the video below: