Need Help Projecting Cash Flow?

Making a profit in business is great. However, how many times have you heard, “If I am making a profit, where is my money?” As a business owner or manager, it is important to know how to understand your financial statements. However, just as important as understanding your financial statements, is knowing your cash position at all times. QuickBooks provides an easy way to prepare a six week cash flow projection for important decision making.

To begin, select Cash Flow Projector from the Company: Planning & Budgeting menu.

Step 1: Welcome Page

The five-step process starts with a Welcome page. The Welcome page provides general information and a Sample Cash Flow Projection. You are also directed to the Help menu that explains the Cash Flow Projection and lets you know what you need to get started.

Step 2: Designate the Bank accounts to include in the projection.

You will need to start out with your available cash balances. QuickBooks will retrieve your actual cash balance from the accounts; however, you may adjust these beginning cash balances if you wish.

Step 3: Enter Cash Receipts into the Cash Flow Projector.

You may choose to base your Cash Receipts on prior history or enter your projections manually. If you decide to enter projections manually, you are given the opportunity to enter the dates, descriptions and amounts of the receipts.

Step 4: Enter Expenses.

These are expenses that you do not track as Bills in QuickBooks. In this section, you may enter amounts by category, such as payroll or utilities. Enter the amount that you spend, the next date you will making a payment on this expense, and designate the frequency in which this expense becomes due. For example, if Payroll is $5,000, the next payroll is on 11/15/08, and you pay twice a month, QuickBooks will record the amount for 11/15/08 and then automatically project future payrolls. Include in this section any loan payments that will be due. Once you enter these expense projections, QuickBooks will retain this information for future cash flow projections.

Step 5: Record payments on your Accounts Payable.

QuickBooks will list all bills that are outstanding along with their Due Dates. You are able to adjust the Due Date to meet your needs. In addition, there is an Adjustment row in the Accounts Payable Summary section for you to make any appropriate changes for specific dates.

That’s it! Click on the Finish Projection button and QuickBooks will display a Weekly Cash Flow Projection report. The report begins with the Beginning Cash and adds Projected Receipts. This represents the total available cash before expenses and accounts payable. Once you subtract the expenses and accounts payable, you are able to see your projected ending cash balance. This projected ending cash balance lets you know if you are projecting a favorable or unfavorable cash balance each week. Also, the projected ending cash balance becomes the beginning cash balance for the following week.

Year End Tips — Form 1099 for Vendors

We are quickly approaching the end of the year. For the next few months, I will be furnishing you with tips on how to make the end of year run as smoothly as possible. A few minutes spent now can save some frustration in the “crunch time.”

This tip is for the preparation of 1099’s. Form 1099 is an informational return required by the IRS. If you have outside consultants or sub-contractors that you pay, you are required to furnish them with a Form 1099.

There is a two-step process in QuickBooks for setting up your Vendor to receive a Form 1099.

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Multiple Accounts Receivable Accounts

Do you need more than one Accounts Receivable account? If you have more than one location or profit-center, you might consider setting up other Accounts Receivable accounts.

The procedure is simple. Just add a new account to your Chart of Accounts. Choose Accounts Receivable for the Type of Account. Give the new account a different name than the original Accounts Receivable account. You might want to change the name of the original Accounts Receivable account. An example would be to have an Accounts Receivable-Downtown Location and an Accounts Receivable-Uptown Location. You now have two Accounts Receivable accounts. Read more