The importance of cash flow cannot be underestimated. In fact, poor cash management is the number one reason why small businesses fail.
An accurate, up-to-date cash flow forecast can address this risk head-on as it predicts a small business’s future cash outlook by mapping when and how much money flows into and out of its bank account. A cash flow forecast will tell business owners when they will face cash shortages and surpluses - and help them plan accordingly.
Many businesses make their cash flow forecast in a spreadsheet. However, forecasting in a spreadsheet is a time-consuming task that is highly prone to human error, making it nearly impossible to accurately estimate future bank balance and make long-term business plans.
Enter Float, the cash flow forecasting app that integrates with Xero and can help you and your clients understand their future cash position. As an accounting add on, Float shows business owners how much cash will actually be in their bank account at almost any point in the near future, viewable up to the next three years.
Colin Hewitt founded Float in 2009 after struggling to maintain a cash flow forecast in a spreadsheet for his digital agency. He understood that without an accurate cash flow forecast, his business would be running blind. With the rise of cloud accounting, Colin was finally able to build an app that integrated directly with accounting software, and Float was born.
About the purpose behind Float, Colin says: “We’ve built something that helps small businesses finally get a grip on cash flow forecasting, in a way that doesn’t require any training or financial qualifications. We wanted to build something that was quick to set up and easy to come back to after a couple of weeks without being defunct. Something you could understand at a glance, and could refer to on a day to day basis.”
Float has many other key benefits that can be extremely helpful to small businesses, saving valuable time, money, and other resources that would normally be spent poring over spreadsheet data. These include:
1. Imports data directly from accounting software for increased accuracy
With Float’s connection to Xero, QuickBooks Online, and FreeAgent, all you have to do is set up the forecast, and Float does the rest. Float imports financial data directly and uses it to ‘fill up’ the cash flow forecast. Each day Float populates the budget estimates with actuals, bills and invoices from the accounting software, meaning no manual data reconciliation for clients.
2. See everything clearly
Float was built by a business owner who understood the struggle of forecasting cash without a degree in finance. That’s why Float is intentionally easy to use for even the less numbers-savvy business owner. Float’s clear interface provides a visual tool to customers, making it really easy to understand their business’s future cash position. Customers can simply take a look at the graph on the first tab to get a quick view of how the future is looking.
3. Scenario plan for investment, new projects, or rainy days
When planning for a change to a business such as bringing on a new hire, taking on a new project, or even just want to see what a rainy day scenario would look like, Float’s scenario planning feature can
help. In Float you can build a ‘what if’ scenario that runs parallel to the official forecast to help business owners see the cash impact of their future plans.
4. Know how and why each number appears the way it is
Doing a forecast manually can hide the true meaning behind the numbers. Why did we forecast a sales increase next month? How close were my budgets to my actual spend? These are common questions that come with manual forecasting. But in Float, all business owners have to do is click on a cell, and they’ll see all the details behind their numbers, including which individual invoices and bills are making up their monthly totals.
5. Stop worrying about errors
With a spreadsheet, one accidental additional ‘0’ could completely throw off a whole forecast, and potentially have serious impacts on business decisions. In fact, according to a University of Hawaii study, 88% of spreadsheets contain errors. Just check out this article for a look at the repercussions of spreadsheet errors.
Float pulls data automatically straight from your clients’ accounting software, meaning as long as it’s correct there, it will be correct in Float.
6. Massive time savings
Float customers report that doing cash flow forecasting manually took them between 3-8 hours a month. Once business owners have set up their Float forecast, this time will be cut in half, or less, due to Float’s automatic updates. This means you can spend less time on data entry and more time doing what you do best, whatever that may be.
“Previously I was doing it in a mess of inaccurate, hard to maintain spreadsheets. Float has saved me hundreds of hours of work over the past few years and helped me gain better insight into my financials.” - David Barnard, Founder of Contrast
7. 24/7 access to company data
Float is hosted in the cloud, so business owners and accountants can easily access company data wherever they are and whenever they need, as long as they have an internet-connected computer.
8. Provides a live feed of the cash flow forecast
Float imports data from your accounting software every 24 hours, so there is no need to manually update anything once the forecast is set up. Just log in any time, and as long as the data has been reconciled in the accounting software, Float provides an up-to-date, rolling view of a business’s health in terms of cash.
Float can provide a host of further benefits to accountancy clients, including helping clients understand exactly how much cash has been moving and how much will move in the future. With this information, accountants can assist their clients to increase their own income, improve their business plan, and cut costs dramatically.
Read this case study for a look into how Float has helped accounting and bookkeeping clients stay on top of their finances.
This is a guest post by Float, for more information visit floatapp.com.