Introduction
Effective cash flow forecasting is essential for businesses to manage their financial health, avoid cash shortages, and plan for growth. With advancements in technology, many businesses now rely on cash flow forecasting software to automate predictions and improve financial planning.
This guide will explore what cash flow forecasting is, why it’s important, and the key software solutions available, including Fluidly, Float, and Xero’s Cash Flow feature.
What is Cash Flow Forecasting?
Cash flow forecasting is the process of estimating how much cash will come in and go out of a business over a specific period. A well-prepared cash flow forecast helps businesses:
- Avoid running out of cash and financial stress.
- Plan for growth by ensuring there’s enough working capital.
- Manage debt repayments and tax obligations.
- Make informed financial decisions.
Why Use Cash Flow Forecasting Software?
Traditionally, businesses managed cash flow forecasts using manual spreadsheets, which can be time-consuming and prone to errors. Today, cash flow forecasting software helps businesses by:
- Automating data collection from accounting systems.
- Providing real-time insights into financial health.
- Predicting future cash flow positions with AI-driven technology.
- Helping with scenario planning to model financial changes.
Choosing the Right Cash Flow Forecasting Software
Different businesses have different needs when it comes to cash flow forecasting. Below are three of the leading software solutions that businesses can use:
1. Fluidly (Best for AI-driven Forecasting)
Fluidly is a cloud-based AI-powered cash flow forecasting tool that integrates with accounting software like Xero, QuickBooks, and Sage. It provides automated financial predictions and is ideal for businesses that want hands-off, data-driven forecasting.
Key Features:
- Automated Cash Flow Predictions based on AI analysis.
- Scenario Planning to model financial changes.
- Credit Control Features to chase late payments.
- Funding Insights to explore financing options.
2. Float (Best for Customizable Forecasting)
Float is a highly flexible cash flow forecasting tool designed for small and medium-sized businesses. Unlike Fluidly, it provides more manual control over forecasts, making it ideal for businesses that want to fine-tune their cash flow planning.
Key Features:
- Real-time Cash Flow Tracking synced with Xero, QuickBooks, and FreeAgent.
- Scenario Planning for financial decision-making.
- Customizable Reporting for a tailored forecasting experience.
- Simple and Intuitive Interface, making it user-friendly for non-accountants.
3. Xero Cash Flow Feature (Best for Xero Users)
For businesses already using Xero for bookkeeping, the Xero Cash Flow tool is a built-in forecasting solution. It provides a basic visual dashboard to help businesses predict their short-term financial position.
Key Features:
- Seamless Xero Integration with real-time financial data.
- Short-term Cash Flow Projections based on past transactions.
- Simple Visual Dashboard for easy financial insights.
- Automatic Syncing with bank feeds and invoices.
Benefits of Using Cash Flow Forecasting Software
Regardless of the tool you choose, implementing cash flow forecasting software offers several advantages:
1. Real-Time Financial Insights
These tools pull live financial data, helping businesses anticipate financial issues before they happen.
2. Saves Time & Reduces Errors
Manual spreadsheets can be error-prone. Automated software ensures accurate, up-to-date financial forecasting.
3. Helps Secure Business Funding
By analyzing your cash flow health, these tools help businesses plan for financing needs and explore lending options.
4. Improves Financial Planning & Decision Making
Scenario planning allows businesses to model different financial situations and make informed strategic decisions.
How Much Does Cash Flow Forecasting Software Cost?
- Fluidly: Pricing available upon request (through Xero or QuickBooks add-ons).
- Float: Starts at £39 per month for small businesses.
- Xero Cash Flow: Included in Xero subscriptions at no extra cost.
FAQs
1. What is the best cash flow forecasting software for small businesses?
- Fluidly: Best for automated AI-driven forecasting.
- Float: Best for customizable, manual forecasting.
- Xero Cash Flow: Best for businesses already using Xero.
2. How often should I update my cash flow forecast?
Most businesses should update forecasts weekly or monthly to reflect changes in revenue and expenses.
3. Can I use cash flow forecasting software if I don’t use Xero or QuickBooks?
- Fluidly: Works with multiple accounting platforms.
- Float: Supports Xero, QuickBooks, and FreeAgent.
- Xero Cash Flow: Only for Xero users.
4. Can these tools help with invoice chasing?
Yes! Fluidly includes credit control features, while Float focuses more on cash flow projections.
5. Is cash flow forecasting software suitable for accountants?
Yes! Many accountants use these tools to help clients manage and optimize their cash flow.
6. Do I need an accountant to use cash flow forecasting software?
No, but working with an accountant can maximize the benefits of these tools, especially for financial decision-making.
7. Is there a free trial available?
- Fluidly: Offers free trials or demos upon request.
- Float: Provides a 14-day free trial.
- Xero Cash Flow: Included in Xero subscriptions.
8. Can I switch between different cash flow forecasting tools?
Yes, but be sure to test each tool’s integration with your accounting system before switching.
9. What’s the difference between cash flow forecasting and budgeting?
- Cash flow forecasting predicts how money will move in and out of the business.
- Budgeting sets financial targets based on expected revenue and expenses.
10. How do I choose the best cash flow forecasting tool for my business?
Consider:
- Automation vs. manual control (Fluidly automates, Float allows customization).
- Compatibility with your accounting software.
- Budget and required features.
Conclusion
Cash flow forecasting software simplifies financial planning and helps businesses stay ahead of potential cash flow issues. Fluidly, Float, and Xero Cash Flow are among the top solutions available, each offering unique benefits depending on your business needs.
To get started, explore free trials, check integration with your accounting system, or speak to your accountant about the best option for you!
