Managing Liquidity Forecast with TRESIO

A liquidity forecast is a fundamental financial management tool used to project a company’s ability to meet its short-term financial obligations. It’s here that the TRESIO liquidity planning tool shines, offering businesses invaluable insights into their cash flow. This tool not only helps in anticipating and preparing for future cash needs, but also efficiently identifies days that could lead to cash shortages not covered by available credit sources. Conversely, it can highlight excess liquidity, paving the way for potential cost reductions. In essence, TRESIO’s liquidity planning tool empowers businesses with the foresight needed for sound financial planning and management.

How to read your liquidity forecast structure

Liquidity planning is the process of creating a cash flow forecast for a specific future period – ‘Time interval‘. This involves estimating all future cash flows and calculating them in a table. By subtracting ‘Outflow’ – the outgoing cash flows (expenses) from ‘Inflow’ – the incoming cash flows (revenues), one obtains ‘Net cash flow’ – the available cash for this period.

What the Liquidity forecast screen shows:

  • Forecast tab – shows planning data together with invoices
  • Plan data only tab – provides a view of planning data only
  • Invoices only tab – shows only invoices data
  • ‘Setting up reporting filters’ section
  • ‘Current balance’ section
  • ‘Cash forecast’ chart
  • ‘Forecast Details’

How to manage ‘Setting up reporting filters’

The current section allow you to adjust the following settings:

  • Currency filter – user can select the currency he would like to use for cash flows and invoices. Choosing the option ‘All’ – will show all cash flows and invoices converted into company currency; if a specific currency is selected, e.g USD; then the user will see only USD payments and the cash flows and invoices for other currencies like EUR etc. will not be shown
  • Time interval – reporting period selectable from a drop down
  • Report date – date from which the reporting period will commence
  • Additional settings – opens a window where you can further adjust report settings, detailed below

Lets have a closer look at the ‘Additional settings’ pop-up. It has three sections that allow you to adjust different options:

Report settings– genera settings for overdue invoices which can only be applied to the Forecast and Invoices tabs

  • Show results in thousands
  • Distribute overdue debtors over – inflow invoices that exceed (x) days
  • Distribute overdue creditors over – outflow invoices that exceed (x) days
  • Ignore overdue invoices after – specify the time limit for displaying invoices past their due date, (x) days

Forecast – comparison plan / is data‘ – these settings are for ‘Open Invoices’, which are shown in the Forecast tab as a gray area on the chart

  • ‘Cash inflows: Use only effective cash flows for’ option – determines the time frame during which the inflow invoices will be displayed
  • ‘Cash outflows: Use only effective cash flows for’ option – determines the time frame during which the outflow invoices will be displayed

Show subsidiary invoices‘ – this check box applies to all tabs

  • Show subsidiary -If selected, the data for both child and parent companies will be displayed

How to read the ‘Current balance’ section

‘Available funds’ – represents the cumulative amount across all bank accounts, displayed in the company’s native currency. This is also a link, which takes you to the Banking screen. More information on this screen is available on our blog post Banking.

‘Explore bank accounts’ – provides a breakdown of current funds’ details

How to view the ‘Cash forecast’ chart

The Cash forecast chart visually presents the fluctuation of inflow and outflow funds over a specified time period, commencing from the ‘Report date’. On the Key below the chart, certain variables are initially grayed out (Available cash, Subscriptions, Total Loans and Credit Line). To include any of them on the chart, simply click on the desired option.

On the ‘Forecast’ chart, you will find additional options located on the right-hand side by clicking on the ‘3-line’ icon, including the ability to view in full screen, print, and download in various formats.

‘Open invoices’ period

The ‘Open invoices’ period, depicted in grey, includes only invoices and does not encompass planning data entries unless they are assigned to categories marked as ‘Is fixed’. The length of this period is defined by the number of days in the ‘Forecast – comparison plan / is data’ section in the ‘Additional settings’ pop-up screen.

How to read the ‘Forecast Details’

Each tab of the Liquidity forecast screen: ‘Forecast’, ‘Plan data only’, ‘Invoices only’ will show the detailed breakdown of the following categories for the specified ‘Time interval‘:

  • ‘Forecast’ tab – will include Planning Data, Invoices, HR Planning, Subscriptions
  • ‘Plan data only’ tab – Planning, HR, Subscriptions
  • ‘Invoices only’ tab – Invoices only

To expand or collapse the details of all categories, users can select the ‘Show All’ or ‘Collapse Categories’, respectively.

Forecast details can also be exported to an Excel file.

For further information, please refer to our blog post dedicated to the Planning Data.