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We find ourselves in very challenging times with so much to think and worry about. Social distancing, PPE, the safety of your employees, mental health and wellbeing… the list is endless. So why not take cash flow off that list?!
Overview
With the help of the Fluidly app as part of your cloud accounting toolkit you can forecast your cash flow for the next 3-12 months and identify ahead of time those weeks when things might get a little tight. This enables you to budget for those periods and be proactive with your cash flow to get you through those testing times.
Fluidly is helping to define the new financial category of ‘intelligent cashflow.’ It helps business owners to sleep better at night by providing them with confidence in their financial future and uses state of the art tools to help to make financial planning as effortless as possible. This is perhaps one of the reasons why they won Xero’s Practice App of the Year for 2020.
How it works
Fluidly aims to fundamentally rethink the way businesses plan and manage their finances, from cashflow to funding.
Cashflow forecasting has historically been a very manual and laborious process carried out almost entirely on spreadsheets. The problem with this is that the data is instantly out of date. Fluidly’s real-time software connects to your Xero or QuickBooks accounting platform and uses the data to automatically build a cash flow forecast in an easy-to-understand chart which reflects your current situation.
The forecast is based on due dates within Xero to project cash inflows and outflows for the next 3 months. However, we all know that few businesses actually pay their invoices on the due dates, so Fluidly takes this one step further. It will look at the trends and relationships within Xero to see when your customers actually pay you, and when you usually pay your suppliers, and creates a forecast based on that information. This makes the plan a lot more realistic.
There are other benefits: Fluidly also has planning functionality, which means you can see the effect on your profits and your cash flow, based on different scenarios. Have you ever wondered what the effect would be on the business if your turnover reduced by 5%, or if you won a new contract and needed to employ another member of the team? This flexibility is all part of the scenario planning and helps you to instantly see the effects of future strategic decisions.
The third arm to Fluidly is tailored business funding. If your forecasts are showing gaps and you need some funding or you are considering expanding your business and need some capital, Fluidly can match you and your business with a range of lenders to find pre-qualified funding offers within minutes, with no commitment to proceed.
Potential pitfalls
For Fluidly to work effectively, your finance system needs to be up to date, which requires you to process your records on a regular basis. The last thing you want is to make business decisions on cash flow based on incomplete information, or on figures that aren’t current.
It is not 100% effective. Whilst the algorithms within the software will look for trends and relationships it cannot predict the future!
For peace of mind, especially when looking for funding decisions, we would recommend asking your adviser to review your forecast before it is presented to the lender.
Costs
The software costs range from £10pm to £79pm depending on the functionality required. You may be able to receive a discount from your adviser and we recommend contacting them first. As an example, Scrutton Bland can provide the full package for £25pm. (*price correct as at 9 February 2021)
Final thoughts
With deferred VAT payments and bounce-back loan repayments falling due within the next few months, now may be a good time to start forecasting the impact of the pandemic on your cash position. Do you need to liaise with HM Revenue and Customs to put an instalment plan in place for your VAT payment? Do you need to talk to your loan provider regarding up-and-coming repayments falling due? These are all questions that can be answered at the click of a button.
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