Creating a 3-way forecast with Futrli & Xero or QBO

Running your business on a spreadsheet is hard. True insights will only be achieved if you can analyse current performance with a 3-way cashflow forecast.

Benefits include…

Predict outcomes from current or future assumptions

Feel secure in your decision making

Learn from your past mistakes

Save money

Achieve sustainable growth

Get an edge over your competition

Work in a real-time environment. It empowers strong and fast decision making.

New data added to your Xero or QBO account will be pulled through to Futrli automatically. And, of course, you can refresh your data on demand too.

Flex and unify

Many businesses will set an initial budget at the beginning of the year. Upload it into Futrli, and then copy a version that you call your forecast. It will flex with your business throughout the year because it keeps up to date as needed. The difference between a budget and a forecast is here in our FAQs if you want to know more.

Working in this scalable fashion ensures your team unifies all efforts towards the same overall goals. Share your forecast with employees so they understand their tasks and roles to help achieve success for the business and a higher net income.

Best practice

First, you must plan for activity in your P&L. All assumptions about your operational activities are found there. But it's just as important to monitor balance sheet movements and the impact on cash flows. Neither should be overlooked; ideally, they would all be tracked together weekly. While a spreadsheet can automate this process, Futrli will make it much easier.

A basic round-up: Your P&L shows you the revenues, costs and expenses incurred during a specific period of time (a month or quarter, for example). Your balance sheet displays your liabilities vs your assets, so you see a literal balance between the ins and outs. Cash flow statements show all the cash your business receives from its ongoing operations. It also shows external investment sources and all cash outflows.

Create your 3-way cashflow forecast

There are different tools within Futrli for different uses. The dashboards are your operational companion. Alerts monitor your most important metrics at all times. PDF reports transform all of your data into board reports, funding applications or business plans. Forecasts are your window to every possible outcome your business has.

Any existing budgets that you have can be exported from your accounts package and then brought into Futrli. You can even turn your budget into a cash flow forecast at the same time.

You can set the relevant sales tax and credit terms for every item you wish to forecast (with flexible payment profiles), allowing you to accurately model the cash flow impact of a zero-rated tax invoice to be paid in 60 days or the tax obligations of an item paid today with 20% VAT/GST.

Method

Navigate to the forecasting section of Futrli. You will be prompted to map your “default settings” which is where the 3-way magic happens. You will enter your tax settings (if you pay GST/VAT) and map your default bank account, accounts receivable and accounts payable lines. These only have to be entered once, to let the system work out the core automatic 3-way forecasting calculations for you.

There are 7 ways to create a new budget, forecast or scenario (as they are all created in the same place to streamline your user experience).

You can use your historical data to instantly create a picture of how you expect the business to perform in the future, by using the last year’s actuals option for instance: this gives you a full forecast in 5 seconds taking your last year’s operational data as the basis.

If things stay the same, how does this affect your cash? It can be a great diagnostic and a great place for you to start if this is new to you. Hit New on the forecast page next to your organisation and you’ll be presented with the varied options.

Other options

Alternatively as a member, you can:

• Build your forecast from scratch, by creating forecast items against your P&L data or balance sheet (the great thing about building your assumptions is that you can see a 12 month period for your entire P&L and balance sheet in one place, resulting in an efficient workspace). Your cash flow is then calculated based on the forecast items you’ve entered into Futrli – of course!
• You can create a forecast version of your existing budget.
• You can create what-if scenarios that link one forecast to another, the difference being you base your assumptions in other linked forecasts on the base forecast. For excellent scenario planning, it's helpful if you use one of these as a baseline forecast and then layer your assumptions in other linked forecasts - i.e., only update the base forecast when things like fixed costs change
• The advanced last year’s actuals creation gives you the option to model changes in all P&L categories, by flexing amounts or % increase/decreases as well as credit terms. Use this to see if you are being a bank for your customers.
• This is an option for your forecast, it will give much more specific forecasts. You can then analyze the data in dashboards and pdfs of these forecasts to see where you need to make adjustments or changes, meaning you make the smartest investment decision

Each account line can have multiple cashflow forecasts per account. Businesses are complex and hold lots of information/data, so one amount for an account does not usually apply.

Create a different cashflow forecast line per account to track activity down the line. This could be in the bank, accounts receivable/payable accounts or cash flow statement, as every transaction can be drilled into.

Make your cashflow forecast data work for your company

All cashflow forecast data can be viewed as seamlessly as your accounts data. Use this in operational dashboards, and PDF reports to gain insight over:

• Actual performance vs forecast and budget performance. This sounds basic but this data should be assessed monthly at a minimum.
• Rolling forecast + actual position. You want to know as time passes what your predicted year-end position is going to be. Use the forecast + actuals option on our cards in dashboards and PDFs to gain valuable insights on this data.
• Every forecast is stored as a granular transaction on a day – if your business requires reporting weekly or even daily – this is achievable at the click of a button.
• The granularity of the forecast visualisations being reportable at account, category, group (creating custom groups is a must) and formula (KPI) unlocks hidden insights for you and your team.

Build upon your statements

Identify the key performance indicators (KPIs) that are relevant to your business. Some industries will have similarities, but a business’ lifecycle and size will mean each one will have specific KPIs.

And, they will inevitably change as your business progresses for varying reasons. That said, we have a beginner’s guide to KPIs and a fully stocked one to get you started.

These are standard for all businesses however in a more general sense:

1: Revenue over the next 12 months.

2: Net income/profit.

3: Net cash flow.

4: Bank accounts (cash flow).

Create Snapshot cards on your dashboard to monitor these daily – they're fun and we use them every day at Futrli.