As we get used to news ways of working during these unprecedented times with lot of Microsoft Teams, Google meets, Zoom meetings and what not to all that supports us to work remotely, I would like to say big thanks to all virtual technologies for keeping us busy during this time
There is a saying that “revenue is vanity, profit is sanity, but cash is reality. I wanted to share a knowledge on cash flow forecasting in D365 for Finance. This feature is available since AX 2012 but it less likely used by customers. I would recommend using this feature to have visibility of future cash in the business based on the current events.
In D365 for Finance, this feature can be now configured from one central place to integrate with General ledger, Accounts payable, Accounts receivable, Budgeting and inventory management.
Cash and bank account management > Cash flow forecasting > Cash flow forecasting setup
In the general ledger tab, specify all the liquidity accounts (Cash or cash equivalent) which should be tracked for cash flow forecasting.
Additionally, the dependencies can also be setup between accounts for cash flow forecasting. This would be a relationship where the forecast for one account is based on the expected activity in another account.
This is for transactions which will not have either orders or invoices. For Eg: A liquidity account for an expected sales taxes payment can be configured. The main account is primary account or a liquidity account which is expected to be impacted by sales tax payables account, you can also setup percentage of allocation.
Accounts payable and Accounts receivable:
In the accounts payable and accounts receivable tabs, setup the typical purchasing and sales behavior to be used for cash flow forecasting, let me explain each default option and how it effects the cash flow forecasting
Time between delivery date\Shipping date and Invoice date: Setup a payment term which indicates the estimated time taken to invoice an order after the delivery\shipping of goods or services.
Terms of payment: Setup a payment term which indicates and describe the estimated time taken for the invoices to be due for payment as per the contract with vendors\customers. The forecast will use the default setting for the Terms of payment only if a value isn’t specified on the transaction.
Time between invoice due date and payment date(Previously known as settlement period): Setup a payment term which indicates the estimated time taken to receive or make the payment for the invoices which are past due
Liquidity account for payments: Setup a default liquidity account for AP\AR transactions
Percentage of amount to allocate for cash flow forecast (Optional): Setup an allocation key to describe the percentage of the transaction amount that should be used in the cash flow forecast.
Additionally, you can override the default values for Time between invoice due date and payment date (Previously known as settlement period) and Liquidity account by Vendor groups and Vendor posting profile respectively
For budgets to be included in cash flow forecasting the budget models should be enabled with cash flow forecasting in Budgeting module
Once the budget model is selected to include in cash flow forecasts, the budget model will be automatically gets added to cash flow forecast setup form under budgeting tab. By default, new budget register entries are included in forecasts after the budget model has been enabled for cash flow forecasting. Inclusion in cash flow forecasting can be overwritten on individual budget register entries.
Budgeting > Setup > Basic Budgeting > Budget models
Demand and supply forecast models can also be tracked for cash flow forecasting. The forecast models can be selected to include in cash flow forecasting in forecast models which will be automatically added to cash flow forecast setup form under Inventory management tab. You can deselect the model if it’s not required.
Inventory management > Setup > Forecast > Forecast models
In the reporting tab, you can calculate cash flow data based on the options listed below.
Total: This option is used recalculate the complete cash flow data based on the configuration setup. Microsoft recommends using this option only if the cash flow data haven’t been updated from long time.
New: This option is used to calculate the cash flow data only for new transactions in the system
Note : You can also to setup a recurring batch process for cash flow forecast calculation.
In D365 for Finance, the cash flow forecasting is enabled with analytical reporting using Power BI. Unfortunately, I did not get a chance to explore analytical reporting yet. However, as soon as I get a chance will update this blog with sample analytical reporting
According to Microsoft
“There are two workspaces that contain cash flow forecasting data Cash overview – all companies and Cash overview – current company. The workspaces show an overview of cash flow forecasting and bank account balances. A chart of cash inflows and outflows gives an overview of future cash movements and balances in the accounting currency, together with detailed information about the forecasted transactions”
Additionally, you can view cash flow forecasting data for specific accounts, orders, and items. Click here to know more information. Here is an example of cash flow data from a Trial balance page:
This page will also show the Date (this means cash flow forecasted date based on defaults applied for typical behavior of business transactions), source of the data, document number, posting type and amount
As i write this blog, i recently caught sight of Microsoft road-map on Dynamics 365 Finance and it is indeed focused on cash flow forecasting with advanced analytics using AI models
Check out for more details:
Look forward to see this feature live soon!
#Stay home #Stay Safe
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