Cash Flow in Dynamics NAV

Cash flow is an important part of running a successful business.  Running out of cash to pay employees and suppliers is one of the main reasons otherwise successful companies fail.  Microsoft Dynamics NAV® has a number of tools that enable you to keep control of your cash flow and make sure your business is both solvent and profitable. In our experience, Cashflow in Dynamics is a massively underused set of tools, so we thought we would do a quick blog highlighting some of the features available.

Basic Tools

The simplest way of getting an overview of your cash flow is by running the Receivables/Payables page.  When you run this, the following screen will appear:- 

This shows either the expected net movements in customer and vendor balances by period or a running total.

While this is useful information it only shows the movements in Customers and Vendors and not the other cash balances, particularly bank accounts.  To allow for these, a more detailed analysis is required and this is explained in the rest of the blog.

Cash Flow Forecasts

NAV’s main cashflow tool is the Cash Flow Forecast.  An example of one is shown below:-

There is no limit on the number of open cash flow forecasts you can have running at any one time.  You can specify whether the forecast will assume that all payment discounts (due and received) will be taken.  You also specify the period the forecast will cover and whether entries with dates in the past will be moved forward to the current work date.  You can also include budgets in the forecast as well.

Manual Cash Flow Movements

The system has information on the date and value of cash movements for customers, vendors, and VAT so it can generate a cash flow forecast for these areas with no further intervention needed.  There will be any number of cashflows e.g. payroll payments, investments, intercompany transfers and so on which will need to be added manually.  This is done via the Manual Expense and Revenue worksheets.  An example of some manual expenses are shown below:-

Calculating Cash Flows

You prepare the Cash flow Forecast from the Cashflow worksheet.  To populate this, open the worksheet from the Cash Flow Forecast and click on the Suggest Entries button.  The following screen will appear:-

You need to tick the types of cash flow that you want to appear on the Worksheet.  When you click on OK the worksheet will be populated as in the example below:-

You can delete or amend any entry in the worksheet or add new ones.  When you are happy with it, you click on the Register button to create the forecast.  

NOTE:-  When you register the Worksheet, all existing entries for the forecast are deleted and replaced by the current entries so the Suggest Entries routine can be run as many times as needed.

Cash flow is very dynamic and a forecast can be made out of date very quickly as circumstances changed.  It is therefore advisable that you update your forecasts (by running the Suggest Entries and Register functions) regularly.  You also need to roll forward the Manual Payments From and To fields on the Cash Flow Forecast regularly to make sure historical manual movements are no longer included in the forecast.  

Cash Flow Reporting

There are a number of reports and views you can run to obtain information on your current and anticipated cash flows and these are outlined as follows.

Account Schedule

There is a pre-defined Account Schedule which produces a Source and Application of Funds statement which broadly complies with the relevant Accounting Standards.  A sample of the output is shown below:-

Analysis by Dimensions

You can create Analyses by Dimensions based on cash flow forecasts (set the Account Source as Cash Flow Accounts on the Analysis View definition).  These work in exactly the same ways as other Analysis Views.  One thing to watch out for is that when you update the Analysis View, the Last Entry and Last Budget Entry No. fields on the Analysis View card are not updated when in fact they are!

Cash Flow Availability by Periods

From the Cash Flow Forecast list, you can run the CF Availability by Periods page.  An example of the output from this is shown below:-

You can adjust the period length and whether the view shows the movement or balance within each period.

Cash Flow Date List Report

The Cash Flow Date List report gives a running total of the cash flow movements in a period. The From Date will default to the current Workdate and while you can change this to a date in the future, there is little to be gained by backdating it as the starting balance is based on the liquid funds currently available.  A sample of the output from the report is shown below:-