Request that budgets be based on cashflow

A wonderful improvement to budgeting would based on cashflow. For example, I need budgets to include cash going out to payoff loans or equity going out to owners (i.e. profits paid to shareholders). Right now I have to do this in a spreadsheet.

Budgets are forward-looking. They are often based on historical events. But they can just as easily be based on your projected cash flow as on anything else. No changes to the program are needed to accommodate that.

Understand that, as an accounting program, Manager has no predictive capabilities. Whatever you decide should be the basis for your budget, you will need to develop your estimates externally. To use your example of loan payoff: you should know from your loan documents what the payments will be for an accounting period. Those predicted payments will form the basis of your budgeted expense amount for your loan payoff expense account, whatever you call it.

Hi Tut, thanks for the reply. I’m not looking for predicative capability. The specific limitation is that using the built-in budget report in Manager only allows me to put in positive or negative values for income or expense accounts. An improvement would allow selecting and put in numbers for asset, liability, and equity accounts. Then I could actually use the budgeting feature.

I’ve tried to make it more useful by putting values and leaving the account set to Suspense in the report (to pretend it’s cashflow out for a liability, for example), but then when I view the report those Suspense accounts and amounts are omitted entirely.

That is not what the report was designed for. Remember, the report is not just a static projection of what the P&L will look like at the end of an accounting period. It is an active report comparing the actual P&L to the projection. In other words, it is primarily a P&L report. The budgetary comparisons are window dressing.

A balance sheet equivalent would need to be a completely separate report. And, of course, it would not be one set of numbers. After all, loan balances, accumulated depreciation, and similar accounts are constantly changing. A comparison of today’s balance sheet against a projection for the end of the year would have little meaning. Comprehensive cash flow modeling is much different from budgeting.

Hi Tut. I understand what you are saying. I hope I have made it clear what would actually be useful. As a paying cloud server customer, I do hope you and your team desire feedback about actual customer needs vs. what “the report was designed for”. I’m not looking for a balance sheet project per se, but I just want to be able to plan my net cash flow at year end, including every reason cash would come in or go out. It would be much more helpful to have this in Manager vs. running a P&L report and copying numbers to separate spreadsheet. That’s all I’m asking. Thank you for the consideration.

@blitternand I’m not entirely sure what you are asking to do. Is this about ability to create budgeted balance sheet? If that’s the case, there is already topic in ideas category on that. See: Budget Balance Sheet

Hi lubos. I think I see what you mean by a budgeted balance sheet. I can see where that might be useful, but I’m not seeking to know the balance of accounts and the end of the budget period. I just want to know that my cash in and cash out will balance so that I don’t overspend. My desired report would have my income and expenses for the year, minus also cash out for liabilities and equity paid. The P&L Actual vs Budget report is most of the way there, and is useful for tracking progress through the year. But of course a business will also have additional cash in or out that might not be an income nor expense, but needs to be planned for all the same.

If you are only interested in making sure your cash balance stays above zero, maybe budgeted cash flow statement is what you are after. You’d set how much cash do you expect to come from or used in various P&L and balance sheet accounts and then have it compared to actuals as you go.

Cash flow statement has been added only this week. But I do want to add budgeted versions for these reports.

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Thanks lubos, that seems a lot closer to what I’m looking for. But it looks very similar to the Receipts and Payments summary report, which also tracks cash in/out including liability and equity accounts. But anyway, adding a budgeted version to the new Cash Flow Statement sounds like it would be suitable.

These last several exchanges take you back to what I said in my earlier response, @blitternand:

Hi Tut. I appreciate you taking the time to respond. Unfortunately, it just isn’t helpful. I feel like your responses are centered around your knowledge of Manager and general accounting principles. Lubos appears to understand what I am looking for and seems interested in helping me get what I need. Thanks anyway.

That is my role as a moderator. I try to help you and others understand what is possible and how to use the program. I am not part of any customer service organization. And I am definitely not part of any marketing activity.

That is his role as the developer.

@lubos I am assuming that the request of the OP, is the same one that I want Manager to be able to do. I have actually made a similar request in the past in various topics.

The problem with the Profit and Loss Budget is that not all your outgoings and incomings are contained within the P&L. I might spend money on developing my helpdesk, which is more a capital expense so it goes on the B/S not on P&L. Or I might start the year off with a negative bank balance, so my profit for the year does not match with what I actually will have in the bank account at the end of the year so I am none the wiser whether my balance will be above zero at the end of the year or any given month in the future because my bank account is a B/S figure not related to the P&L figures.

Essentially the requirement to make sure that cash balance stays above zero in future months is what I think we are both looking for - so this budgeted cash flow statement you are referring to may be what we are both looking for?

The biggest problem most businesses with small budgets have is ensuring that there is adequate money in the bank account every month for expected expenditures and to ensure that one does not overspend in the upcoming year. I don’t care what the report is called nor whether it is an accounting feature, but that is an important business requirement that virtually every business requires.

As the OP said, the P&L budget is a step in the right direction but fails on three important points. It does not include money that you are spending that is recorded in B/S. So my budget is not accurate because money I am spending is not showing in that report. This is why limiting the budget report to just P&L does not work.

The second and possibly more important problem is that it does not help plan your cash flow in the upcoming year to ensure that you don’t run out of money in any given month!

The third problem with the budget report is that I can only enter figures. There is no way in the report to detail how I arrived at those projected figures - so essentially I still have to use an Excel spreadsheet to calculate the figures and update them over the course of the year.

I am hoping that you will be able to add this functionality while you are working on the Cash Flow reporting functionality as I consider this to be one of the most valuable features that could be implemented in an accounting program and far more urgent than other Idea in the idea categories. It would also put Manager significantly ahead of any other accounting program as most of them don’t have this functionality either. The idea that one needs to copy and paste figures between spreadsheet and accounting program really should be obsolete. All the figures are already in the accounting program - all that is required is a way to incorporate it into a report that shows future balances for each month and includes current year B/S entries etc.

Here is a topic I created in the past on this topic - Budget and Cash Flow

The data in your accounting system records past transactions so all the figures to produce a forecast of future cash flows are not there.

It is true that you may have information on future income and expenses - for example recurring invoices, pay slips - but these are not all the information required - you might have won a new contract which starts in two month time, you might have a major expense forecast for next summer, etc etc

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Hi Tut. Thank you for the clarification of your roles and position. It explains a lot.

Hi Dalacor. You hit the nail on the head here and explain this situation perfectly. Thanks for writing.

I appreciate the Manager team and what they’ve built so far. I used the free version for years and don’t mind being a paying customer now. That said, I hope they continue to see Manager as a tool to serve business needs. I see what Tut is saying about how the app works today. I think what Dalacor and I are both saying is what we actually need from the app in order for it to be even more useful as a business tool. Yes, we can use a spreadsheet to do what we want, but having to manually copy/paste financials every week or month to check on the health of the business is a hinderance to productivity.

Dalacor mentions there is an API available to retrieve data out of Manager. That could be useful, but I’m not a developer, so unfortunately I can’t make use of it so it doesn’t help me at all.

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@blitternand The API is meant to be used to link Manager with another system. For my user case, my clients use a helpdesk system to log IT Support Tickets, Inventory Management etc. I want my clients to be able to view all my quotes and invoices to them, for them to upload their Purchase Orders so that I can process their orders and for the system to “chase up” late payments etc. So this is why I will be making use of the API.

For our mutual requirements, the API is not really helpful as you need to link it with something that can provide this functionality. To me, this report should be within the program.

Hi Joe91. I suspect part of the misunderstanding here is that maybe the team thinks we are asking for Manager to predict future financials. That’s not what I’m looking for. I can come up with my own future predictions of expenses for the year. I just want to input my own “target” values for cash in/out for the year and then have a report that shows the actual year-to-date figures compared with my own estimates for the entire year. In other words, just like how the “Profit and Loss Statement (Actual vs Budget)” report already works today but also letting me choose accounts beyond just P&L accounts. As Dalacor said, cash goes in and out of a business for other reasons than as income or expenses; some go to capital, equity payouts, loan payoffs, paying income taxes, etc.

@Joe91 Yes you are correct that the data records past transactions. My other topic explains in more detail how all (or more accurately most of) the information.

My clients need to do their annual budgets each year. It is my intention to provide annual quotes for them for my services as well as inventory that they want to buy over the next 12 months. So I can use those quotes to create the P&L budget. The information contained within those quotes will provide the necessary figures to calculate VAT returns each quarter, provide bank balances each month etc.

Perhaps to state that Manager will have all the information is not strictly accurate. But using the annual quotes to provide the basis of the P&L report for expected income and sales and using previous years annual expenses like electricity etc, it is possible to create nearly all the information required thus negating the need to use an excel spreadsheet to do all this. Will the quotes and past records have everything? No - but I suspect I could get 95% of the information using quotes and past invoices to create this report.

I think that the term prediction is a misleading one. By using past invoices such as your annual or monthly rent (presumably will be the same in the upcoming year as the previous year), you can “predict” a lot of your incomings and outgoings as they will be the same as the previous years! There are a lot of business expenses that remain largely the same each month/year. You already have this information in past records - so why not make use of them?

I have a monthly P & L report in Manager with the monthly information for the financial year.

I copy this to EXCEL and use it as a basis for next year’s budgeted P & L

Then in Excel, I add non-P & L cash items eg capital expenditure, to get a forecast P & L and Cashflow

Exporting the monthly figures works well enough for me - but then I only update my forecasts once a quarter