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Quickbooks cash flow tool

Quickbooks cash flow tool

Welcome to this video covering the brand new cashflow dashboard feature from QuickBooks online. My name’s Johann Goree I’m the managing director of OnPoint Accounting. We’re an accounting and bookkeeping firm based in Scotland, supporting customers across the UK.

There’s currently a really popular phrase, that’s becoming more popular over the last few years in businesses, but in the last couple of weeks, due to coronavirus it’s become the most important phrase a business owner can follow. And that phrase it’s cash is king. At the moment in particular, it doesn’t matter what your balance sheet or your profit and loss says. If there’s no cash in your bank, you’re going to struggle. So with that in mind, QuickBooks has just launched this morning, a brand new tool to help you understand your cashflow and see patterns starting to emerge.

First of all, this new tool is not a cashflow forecast tool. So let’s have a look at how this all works then. What we’ve done is we’ve just logged into our demo company that OnPoint Accounting uses for demos with clients and potential clients to explain QuickBooks and how it works. So this is going to be looking fairly similar to how your QuickBooks will probably look at the moment, values your current dashboard on it. When QuickBooks launches a new feature, it often puts it into what is called QuickBooks labs. So this is where our feature goes, where the development team have finished with it for now, they may still be working on it in the background, but it allows them to be able to build up feedback and turn it onto clients gradually instead of one big go, so the system doesn’t suddenly buckle.

So what we’re going to do is we’re going to go in and turn this on. So we’re going to go to our cog on the right hand side of our screen, and we’re going to go to QuickBooks labs. So at the moment, there’s two features in QuickBooks labs on this account. One is the import style. So this allows you to import invoice styles, more inline with your invoices before you started QuickBooks. We’re not worried about that one just now, but we are going to be playing with the cashflow dashboard widget.

So we’ve got a couple of options here. We can see a demo where it’s just going to show you a quick video. It is a bit of an American video with dollars, et cetera, but it covers the same points. And then we’ve got an option here of give feedback. This allows you to feedback ideas, any bugs, anything like that to the development team so they can keep working on it as we go. So we’re just going to turn it on for now. So that’s it on. We’ve got confirmation of it turning on there, so I’m just going to go, done. And then I’m just going to refresh our screen here because I want it to pull through the change.

Okay, here we go. So that’s the change. This is the new dashboard feature, the new widget on the dashboard called cash flow. Okay. So it automatically comes in and it sits on top of everything else because this is the most important information at the moment you’re going to need for your business. It’s all about how much money is in your bank, how much is coming in, and how much is going out. Because this is a demo account. There’s very limited data in it. We don’t spend forever keep populating it with data. We just top it up every now and then we have some data to keep it up to date and keep something relevant for working on with clients as demonstrations.

So let’s have a look at the widget itself. We’ve got the dropdown arrow, which gives us six, 12, three and this month. So that’s going to be looking at different time periods so you can see the details in different time periods. So we’ve got money in, which is the graph we’re on now, where we’ve got a green bar for income, and a turquoise bar for outgoings. And if that isn’t turquoise, I do apologize. I am actually slightly color blind. So explaining colors to people that aren’t color blind can be a bit dangerous. And then we’ve got the cash balance. So this is you have option to review. And what this shows is a line graph, tracking all your bank balances combined, every single day of the week, and of the month. As you can see, I’m just going along and you can see all the dates ticking along there, nice and easily.

So the cashflow is completely and solely based on your bank transactions. QuickBooks hasn’t designed this to care about what invoices are coming in, what invoices haven’t been paid, what bills haven’t been paid, or what bills have yet to be paid. It is purely tracking the content of your bank accounts, because ultimately you can raise as many invoices and bills as you like, it doesn’t impact on your bank account until the money’s in there. And you need the money in your bank account to pay your bills and to pay your staff. So this is solely looking at bank accounts. So we’ve got two bank accounts on this demo account.

What QuickBooks has done though, is it’s not just looking at the bank account balance. It’s also looking with the transactions that you have processed. It’s also reviewing the transactions you haven’t. Because at this level, QuickBooks doesn’t care whether something’s a purchase or travel or website cost or advertising or wages, all it cares about is that money has left the bank. or that money has come into the bank. So it can review and update that without you having to do anything. Sorry, because it’s a demo company, we always keep the tour on. So helps clients work their way through.
So I don’t have to categorize and reconcile all these lines to update the cash flow here, because QuickBooks has done that, has taken those transactions into account for me. So literally the minute you log in providing the bank account’s up to date, as in they’ve been refreshed, they’ve spoken to the banks, they pulled the latest transactions through, you will have an up to date cashflow. So we’ve got two graphs, as we said. We’ve got the money ins and outs, and we’ve got the cash balance. So what are we looking for on each graph?

Well, on this one, if it’s in green, that means you’ve got a positive bank account overall. If it starts dipping and becomes red, that means it’s gone below zero, which means between all your bank accounts, you’ve got a zero balance. Now that could be you’ve got a one big bank account with loads of money in it. That’s fine, but there’s another big bank account, who’s got a huge overdraft. And when you add those two numbers together, you’re still in the negative. So that would go into the red. But what it allows you is to start spotting, if this line, for example, started declining, you can start spotting it, “Right, we need to try and reserve some funds. We need to try and talk some to some people about not paying their bills or about speaking to some people to try and get their invoices in a bit quicker than that, perhaps they weren’t going to pay you.”

The other graph, on a normal day to day scenario, what we’d expect is a nice, healthy green bar here representing income for the month, and a turquoise bar that’s not quite as tall as the green bar representing expenses for the month. And that means you’ve got positive cash flow, the bank balance is going to keep increasing while that’s like that. However, what we are going to be seeing now because of coronavirus and the lockdown is the green line may well be much lower than that of the turquoise line, which means you’re spending more money than you’ve got coming in. So at that point, you need to start reviewing, “Right, how can I bring this line down, and bring it into line with this one a bit more so that we aren’t spending quite as much money, and we’re not digging deeper into our reserves.”

So here we have a quick snapshot, really, really useful bit of information here. You go across and you’ve got a snapshot of saying, “You’ve got a change.” And It’s 2000 pounds here. And there’s a minus. That means you’ve used 2000 pounds more than you’ve had to come in. So what I would then suggest is you would go to your reports, up here, and you’d want to look at your profit and loss. And you’d want to look at the profit and loss potentially for the last month to see where that money was spent. Because at the moment you need to try and decide if this is going to replicate then the same again in the next month, you’re going to need to see about 2000 pounds. Otherwise you’re going to see a bigger dent in your bank balance.

So there’s a nice healthy 5,000 pound rental expense here. Now it may be that you can negotiate with your landlord to reduce this. And if you could do that by 2000 pounds, then actually what you’d have achieved is bringing that cash balance back in line with the income, and you’d have a much more leveled graph in the following month. So that’s a really helpful snapshot of data straight away to say, you could

see, “Oh, hang on over the last couple of months, we might have a problem. We need to have a look at where we’re spending our money and see if we can reserve any, reduce our costs to bring it in line with the income.”
Normally I’d just go straight away with saying, “Right, how do we drive your sales? How do we get that up?” And that’s still a first stop for most people to look at, is can we improve ourselves? At the moment with coronavirus lockdown though, that’s highly unlikely. So what you need to do is review how you’re going to reduce the costs instead, and then look at the sales.

And by doing that, by doing those actions with this graph, you’re going to stop seeing a line declining here and you’ll see it flatten out more. So that’s the really beneficial side of this tool. As I said earlier, this is not a forecasting tool. It’s not predicting what’s coming in or going out. There are some really good tools out there already that can do that, such as Float cashflow software, plugged into QuickBooks works really smartly, does a bit of artificial intelligence, and it can work out roughly where you’re going to be. So if you want to forecast, you need to use another tool like that, which works really and partners really well with QuickBooks.

But at the moment, what QuickBooks has developed here is the ability to see where you are, and to spot patterns so you can start preventing further damage to your business with cashflow. So that’s everything on the QuickBooks new feature. This feature we’ve been told is going to get a lot more work and attention over the months to come. But for now I think this is a really positive feature to have put into your QuickBooks completely free of charge. There’s no extra costs to have this feature turned on, but it gives you a really powerful starting block to working out where you can and can’t save your money, and where your income may or may not be coming from.

So that’s everything from me for today. I hope that helps. And I hope this feature is really useful. If you need any help understanding the data that it’s presenting or turning it on, then just get in touch with myself, or my team. We’re available to help at OnPoint


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