It has been nearly a year of Covid-19 restrictions, in which organisations have been forced to make several changes, in many cases for the long-term.

Accurate cash flow management has never been more important.

Consumer spending habits and behaviours have changed, impacting cash inflows. In addition to this, business’s spending habits have most likely also changed – for example, with many staff working remotely, organisation’s energy bills will have reduced.

Cash flow forecasting has become more critical over the past 12 months, yet much more difficult to execute. Many companies face the difficult task of trying to determine the extent to which the changes brought about by Covid-19 will affect their business, customers and suppliers – during and beyond these times.

Historically, many small and medium businesses (SMB’s) have overlooked the need for accurate cash flow forecasting for a number of reasons, such as:

  • It can be time consuming to prepare due to the lack of automation
  • Data in manual forecasts can lack accuracy.

It is important, now more than ever, to ensure the appropriate attention is given to financial planning and to recognise how you can use your financial solution to capture information to make better, more informed decisions on cash inflows and outflows.

Incremental’s recommended financial solution for SMB’s is our Core Dynamics 365 Business Central Finance package – a comprehensive financial management solution that will have you up and running in just 6 weeks.

Predictions

The cash flow management functionality within Dynamics 365 Business Central means that cash flow forecasting no longer needs to be seen as a tedious and time consuming task. Businesses can use the past 12 months of historical data, generated throughout the pandemic, to make predictions for future periods, as they continue to navigate the crisis.

In Dynamics 365 Business Central, data automation, statistical methods and Azure AI functionality can generate models of time data series to calculate advanced forecasts as opposed to traditionally limited cash flow estimations. Azure AI is available in Dynamics 365 Business Central out-of-the-box, it just needs to be switched on to make the data you already have work better for you.

Azure Machine Learning is a free benefit Dynamics 365 users can use every month up to a set limit (a specified amount of computing time). This can be used to model your data sets and generate predictions. Once you pass the limit, you can either continue your work the following month for free or subscribe to the service.

Scenario planning

The cash flow forecast within Business Central is an advanced reporting tool that uses Microsoft Azure Machine Learning to model various scenarios and give you insights into what to expect.

The ability to produce multiple variations of a cash flow forecast means that businesses can easily build in scenario planning for good, average or bad scenarios. This allows businesses to plan accordingly and be more proactive in its approach.

Cash flow sources

Business Central provides you with the option to include multiple sources of cash flow, including:

  • Sales orders
  • Purchase orders
  • General ledger accounts
  • Receivables
  • Payables
  • Liquid funds
  • VAT
  • Manual revenues and expenses.

Through a few easy steps using the relevant data in your ERP system, cash flow forecasting can be far simpler and more visual than a traditional numbers-heavy spreadsheet. Modelling alternate scenarios can help business owners to understand how various situations will impact their cash flow – a crucial part of business planning.

Cash flow payment terms

The ability to apply cash flow payment terms to vendor and customer records within Dynamics 365 Business Central, means that whilst due date calculations on transactions can be tracked from agreed payment terms, cash flow forecasting can be based on actual payment terms –  when customers typically pay you and when you typically pay your suppliers. This can provide a much more realistic view of the cash flow availability in forecasting periods.

Find out more about Dynamics 365 Business Central

Whilst we can attempt to predict when Covid-19 restrictions will begin to ease, being prepared for new lockdowns, changing restrictions or even future pandemics is key to navigating and thriving in uncertain times.

It is possible to build resilience during these times and emerge stronger with strategic cash flow management. To find out more about D365 Business Central download our comprehensive guide or discover our 6-week, low-cost Core Dynamics 365 Business Central – Finance package.