This Cashflow (Basic Settings) help note is part of a series of articles on Cashflow Settings. For many organisations, the remainder of the Cashflow Settings in this series and the basic Cashflow settings described here are all that is required to prepare a Cashflow and 3-Way Forecast.
For more advanced scenarios you may need to also consider the Cashflow (Advanced Settings).
In this article we'll look at how to configure Debtor and Creditor payment profiles for Calxa.
To review and edit your Cashflow settings click on Budgets & Cashflow -> Cashflow Settings -> Cashflow Forecast.
Nominate your primary Trade Debtor or Accounts Receivable accounts on the left side of this screen.
The balance of these accounts is used to determine the cash timing of forecast income. The calculated debtor day count is considered the average number of days it takes to receive payments on debtor income.
Note: If you change the nominated debtor account the day count is recalculated after SAVING CHANGES.
Nominate your primary Trade Creditor or Accounts Payable accounts on the right side of this screen.
The balance of these accounts is used to determine the cash timing of forecast expenses. The calculated creditor day count is considered the average number of days it takes to make payments on creditor expenses.
Note: If you change the nominated creditor accounts the day count is recalculated after SAVING CHANGES
Below each of the calculated day counts there is a Distribution preview which shows how Calxa will forecast your receipts or payments in cashflow forecasting. The numbers shown in the distribution chart reflect a percentage of the total amount invoiced in the current month and what portion will be collected in what month.
The statistical assumption is that some invoices will be paid before the average and some after. For those of you who want to go under the hood and understand the full calculation logic, please refer to this help article - Creditor and Debtor Calculations.
You may optionally choose to override the calculated day count with your own custom value. Check the override option and set a days count as shown above, See how the distribution has updated based on the lower day count. We now have income generally being collected earlier.
Note: Here are some of the reasons you may consider overriding the calculated value:
Calxa requires at least 12 months of actuals to calculate an average - therefore if you don't have a full year's history in your accounting data you'll likely need to set an override value.
The Calxa calculated day count will change from month to month. If you prefer to use the same assumptions in your forecast every month, setting an override value ensures this will remain consistent.
Lastly, you may simply prefer to set a value based on your own expectations moving forward. Please be aware, however, that setting unrealistic day counts can cause unexpected results. See Understanding and Troubleshooting Cashflow for more details.
The setting you choose here will apply, in general, to most of your Income and Expense accounts, with some exceptions like Wages and Superannuation, which are configured in separate Financial Settings menus. If you have complex requirements, or need to configure for cashflow payment profiles on each account, please refer to the Cashflow (Advanced Settings) help note.
Want to learn more? Have a look at the other help notes in the Financial Settings series: