Use our bookkeeping software to manage your cash flow
Stay ahead of the game and avoid nasty surprises by entering pending collections and payments, as well as recurring expenses. Watch the following 3 minute video of how to manage your cash flow using myAbakus.
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Video transcriptionHi I’m Federico and with the help of Alex’s mac os voice, I’m going to make you a quick demo of how to manage your cash flow using myAbacus.
We are in the demo company that we’ve been using for this video series.
Let’s quickly review where we left after the last video on how to stay on top of your cash.
We go to income…and see our sale for 1450 to Willie Coyote, who still owes us 725. We go to expense…and see our purchase for 2610 from Warner Brothers, to whom we still owe 1305.
Now we go to cash…and see our 920 balance. As we had already seen…a starting balance of 1500, minus 1305 we paid Warner Brothers at the moment of the purchase, plus 725 Willie Coyote paid us at the moment of the sale, equals 920.
And because 920 is my real cash balance, I can be assured that the information in myAbacus is complete and accurate. So far, it is all good in terms of understanding what happened with my cash.
This is of vital importance. But to understand and control what will happen is equally or even more important, because although we cannot change the pass, we can certainly plan for the future. Let’s see how.
We go back to cash…and instead of checking how did we arrive at the balance we have today, we are going to see what could happen to that balance going forward.
In “Balance date” we select “end of the month” and we find to our surprise that the projected balance is -385. In “Show changes from” we select “today” and we can see how this is explained by the fact that the 920 we have at the moment is insufficient to cover the 1305 we have to pay Warner Brothers on the 30th.
If we…extend…the time range…for a couple of weeks…we can see how our problem is that the 725 payment from Willie Coyote will only get to us next month. Although this shows that we are in essence solvent, it also alert us about a potential liquidity problem on the payment day.
This does not mean that our cash balance on the 30th will be -385 with all certainty, but it does show us that if from today until that day, we don’t receive 385 more than we spend in cash, we will have to call Warner Brothers or Willie Coyote or our regular lender.
This is important in one hand, to avoid nasty surprises. But it is even more important to evaluate the impact of certain decisions on the business’s cash flow.
For example, making an investment to expand your business might make all sense. But if they way you finance it generate cash outflows greater than what your cash flow can handle, the financial feasibility of the business is affected, compromising its own survival. And not because it is a bad business or the wrong decision, but simply from biting off more than you can chew.
I hope this was helpful and clear. And thank you very much for your attention and interest in myAbacus.