2.CR.1.4 Cash Flow Planner

Scenario: Craig doesn't really see how QBO can help him plan for the future. A tool that Craig might find helpful is the Cash Flow Planner. See below for the full scenario.

26 steps

QuickBooks

Akadian

Start in the Sample company.

To complete this exercise, you must be in the Sample company. From your QBOA account, click the Gear icon on the top right corner of the screen, then select Sample company.

Note that you will be logged out of your current account. If you are sure, click "Continue" to confirm.

Full Scenario

As mentioned above, Craig doesn't really see how QBO can help him plan for the future. A tool that Craig might find helpful is the Cash Flow Planner. The Cash Flow Planner allows you or Craig to add predicted future data and view charts based on different scenarios *without actually affecting the books.* It uses three types of data: 1. **"From your books"** transactions are based on actual data in QBO. 2. **"Predicted data"** are the anticipated transactions based on historical behavior and upcoming transactions. 3. **"Added by you"** reflects transactions you have manually added in the tool but not in the books. Take a look and get started with the exercise.

Click the "Planner" tab

Click "Start planning"

Click "Let's go"

The number that appears prominently is the current bank total (not the QBO total) of all connected bank accounts. Because it is an accurate representation of what's happening at the bank, this number will not change unless/until the bank itself has different data. You also see this number when processing Bank transactions. Take a closer look.

On the left navigation bar, click "Bank transactions"

Click the "X" to close any pop-ups that appear *Note: this will only show the first time you are in the banking area.*

When processing bank feeds, QBO always shows you both the actual balance at the bank and the balance of your connected accounts in QBO. These two numbers will rarely be the same because you will always be recording things in QBO before they actually come through the bank. In the Sample company, the bank balance of the Checking account is negative. However, this will almost never be the case in a real-life scenario.

Now that you understand where the number is coming from, go back to the Planner.

From the left navgiation bar, hover over Dashboards, then select "Planner"

The important part of the Cash Flow Planner is the graphic representation of the increase and decrease of the bank balance over time. The solid portion shows the past, the line represents today, and the shaded portion shows the projected future. The default is to look at a year's worth of data, but since there is not a whole year's worth of data in the Sample company, change that to just the last three months.

In the field below -$3,422, click the "down arrow", then select "3 months"

You can use your cursor to hover over any day in the graph to see the actual historical activity or the projected future activity for that day. Projected future activity is based on historical repeated behavior (so it will be more accurate the longer you have used QBO) and any scheduled recurring transactions you have set up. In addition, QBO will assume that an invoice or a bill will be paid on the day they are due. You'll take a deeper look at this in future steps.

The current view is the Cash balance view, which shows the bank account balance relative to zero or another threshold value that you can set. You will look at the threshold a bit later. You can also see the Money In and Money Out values relative to each other.

Click "Money in/out"

Here you can see that the previous month is solid. But the current month is partly solid and partly shaded, reflecting the fact that there are still transactions projected for this month. You can use your cursor to hover over any month in the graph to see the actual historical activity (past months) or the projected future activity (current and future months).

For the remainder of this exercise, you will be looking at the Cash balance view.

Click "Cash balance"

Under the main graphic, the next section shows that there are 13 Overdue Transactions. As mentioned previously, QBO assumes that invoices and bills will be paid on the day they are due. If they are not, then QBO can't use them in the historical numbers. And it can't use them in projections either because it doesn't know when they are expected to be paid. You can enter these projections manually, however. Entering these predicted dates ***doesn't affect your actual books***. That's the power of the Cash Flow Planner—you get to enter hypothetical situations and see what would happen.

Watch what happens when you update the overdue transactions as being paid.

Click "Update"

Click on the "Kookies by Kathy transaction"

The Cash Flow Planner allows you to see how it would affect the bank balance if Kathy paid her invoice at some point in the future. For now, say that Kathy will pay her invoice at the end of this month.

In the Date field, type a lowercase "t" for today, then a lowercase "h" for the last day of the month ("h" is at the end of the word "month," which is why you type the "t" then "h"). *NOTE: You must enter a date in the future. If you are doing this exercise on the last day of the month, you will need to enter the last day of next month. Click the calendar icon and navigate to the correct date.*

Click "Update"

Check out how this change affected the graphic.

Click "Done"

The timeline shows the projected deposit you just made, but it's such a small number that it's hard to see much of a difference on the graphic. Update the other overdue transactions.

Click "Update" and then follow Steps 13-15 for the remaining 12 overdue transactions.

Once changes have been made to the remaining 12 overdue transactions, you can see that the projected cash balance is starting to be green, indicating a positive balance. Hover over the last day of the month to see the totals of all of the transactions you processed.

The next section of the Cash Flow Planner is the list of transactions that affect future projections. These are the ones that are currently expected to hit the books, but you can remove them to see what kind of an affect they would have on the bank balance. Say, for example, that Craig thinks he can negotiate the bill from Diego down to $100. You can make that change and see what would happen.

Click "Diego's Road Warrior Bodyshop" *NOTE: You could use Filters to only show certain transactions on the list so that you can decide which ones you would like to adjust.*

In the Amount field, update this amount by typing "100"

Click "Update" *Remember, this is just for planning purposes. Your changes here do not actually affect Craig's books.*

As you can clearly see, not having to pay that huge bill would significantly affect Craig's balance. In addition to adjusting the upcoming transactions that are already in the books, you can use the planner to add new ones.

What would it look like if Craig landed that $20,000 contract?

Click "Add item"

In the Description field, type "Big one-time contract"

In the Amount field, type "20000"

Notice that you can create a Money In or Money Out transaction, and you can set it to be one-time or repeating. Leave these settings as they are.

Click "Save"

This, of course, would have a huge effect on the bank balance, as you can see on the graph. Notice that currently QBO shows zero as the threshold. The threshold is the number that the business owner really doesn't want to drop below. Of course, no one wants to drop below zero, but it's also good business practice to have a "buffer" in your account. Dropping below this number would indicate that you need to put in effort quickly to turn things around.

Find out what would happen on the graph if you set up a different threshold for Craig.

Click the small "Gear icon" above Cash balance

Notice that you can control which linked accounts are included in the Planner.

In the Set threshold at field, type "10000"

Click "Save"

As you can see, QBO has moved the threshold line so you can set your targets. The colors do not change, however, so you'll have to look carefully. Now that Craig has the Cash Flow Planner at his fingertips, perhaps he can use it to make better decisions and plan better for the future of his business.

🎥 Video

Want to follow along? [Click here](https://youtu.be/bNb0XQTxH5g) for our video walk-through.

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