Budget and Cash Flow

I am going to be integrating Manager with my CRM system via the API shortly.

One goal I would like to solve with linking Manager to my CRM system is to create a budget (profit forecast) for each financial year and also to implement cash flow forecasting. I am not clear if profit forecast and budgeting are the same thing?

My thoughts are to create annual quotes each year for each client as they themselves need to do an annual budget. I would like the upcoming financial year’s expenditure by clients to be agreed before their financial year starts. I would make these quotes in a category called budgeting or something like that. This would to some extent address the income side of the budget. On the portal, I would be able to see what the income totals for each inventory item, non-inventory item would be composed of. Something I currently cannot do in the Manager Budget/Profit and Loss form.

For the expenses side, I could possibly use Purchase Orders (again in a budgeting category) to extrapolate expected expenditure for the upcoming financial year. I could include my corporation tax as an estimate based on the current financial year’s budget I guess. I will also need to add Capital Asset Expenditure during that year as well.

All this would give me is what income I am expecting to receive in the following financial year and what my expected expenditure will be. I don’t expect to update this much if at all, during the year as the purpose of the report is to see how much cash I will have at the end of the year after all my sales and purchase. Hopefully the api can link this back to the Manager Budget form. This will be fantastic for budgeting or should I say more accurately profit forecast, but does not help with cash flow.

I am trying to see if there is some way that I can use the existing data in Manager to create the cash flow reports based on the budget information already entered. I am wondering if creating a custom field on these budget quotes and budget purchase orders where I can put a date in to mark when this income/expenditure would take place although I do have services that I pay monthly rather than annually. But I can’t see it working as cashflow needs to be updated dynamically in real time. It’s not a static report like the budget will be more or less.

Does anyone else have a better idea. I currently find budgeting in Manger too time consuming and currently have no cash flow forecasting at all.

Are you talking about having ability to tell Manager…

  • I pay rent $1,000 per month
  • I pay electricity $500 per quarter
  • I pay staff $2,000 per week

and similar stuff on income side and have Manager to generate some kind of forecast?

Perhaps it would help if I explain what I am trying to achieve with this.

My understanding is that I need two reports. Budget or profit forecast. Secondly a cash flow option.

Annual profit Forecast

The profit forecast would calculate all expenditure (such as rent, inventory cost, salary, capital asset purchases and corporation tax) i.e. any money that I would spend during the year and all income such as IT Support, Inventory Sales, Network Deployments etc.

Using the Sales quotes to clients (which I need to issue to them every year anyway as they need to do their own budgets) and purchase orders, would achieve two things. I can see the totals for all income and expenditure. So firstly I can see - this is my expected profit after all transactions. So I can allocate say £3000 to purchasing new office equipment or spend more on my CRM Helpdesk system etc or I can buy a new company car etc. The second aim of using the sales quotes and purchase orders is to allow me to see what say the inventory costs and inventory sales totals are made up of. I have found even using my excel files as the basis of these calculations that I can’t always see how I got the figure that I put in the Budget (profit and Loss Report).

By using the Sales Quotes (which my clients need anyway), it’s much quicker to calculate inventory costs and inventory sales as I am just pulling in the figures from the inventory purchase and sales fields in the sales quote. In addition, for annual services, I just need to clone quotes from previous years. This is a massive time save compared to the old method of going through inventory items, adding each item to excel, totting up the totals etc.

As far as I can see my method of using the Sales quotes and purchase orders to form the basis of the Budget form works well as nearly all the information I want is in those transactions. I would just need to find a way to add corporation tax, salaries, dividends and Capital Purchases as these “expenses” reduce my working capital left over to buy a new company car or whatever I want to spend my money on.

For the budget/ profit forecasting, I am interested in the annual figures, not monthly as most of my income comes in June and most of my expenses are monthly, but the purpose is to work out what my expected profit is so that I know how much money I have to spend on discretionary purchases.

Hopefully that explains how my budgeting plan will work.

Cash Flow

What I am trying to achieve with the cash flow is to anticipate in advance how much money I will have at any given month to ensure that I can plan my discretionary expenditure and client allocated expenditure in such a way so I don’t have periods of the year when I have lots of money in the bank account and other months, when I am in the red, because I have too many expenses coming off in the same month.

For example, inventory cost is a big problem for me in that I have to buy all the equipment first, deliver it to the client and then invoice them and wait 30 days for payment. This is how schools work in England. So I do need to spread these out over the year, but before I can do that I need to know what my expected inventory costs for the year will be, hence the profit forecast budget report.

My vat bill is another issue in that I need to know if I will have sufficient funds in three months time to pay it.

Conclusion

Also I need to know what I don’t know. My understanding is that I need these two reports. But in reality, I might actually need three reports as perhaps many businesses have another report that I don’t know about to manage their funds or business performance over the years.