ThinkOut is an intuitive tool, so anyone can get around easily. There are some main ”principles” or guidelines if you want, that you need to follow when handling the business cash flow, no matter the tool you use. We pointed out the basics that will help you work with ThinkOut and get accustomed to cash flow management in general.
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Get Familiar With Cash Flow Management and ThinkOut
Organize the Cash Plan
The ”secret” to a useful cash flow plan is the way you organize it. No matter the type and size of the business, there are some basic steps to stick to.
First of all, cash flow means money coming in and going out of your company as Revenue and Expenses. So your plan will have these two main groups (pre-set by ThinkOut) which subdivide into other categories, according to your company’s activity.
Organize Income by revenue type; group it by operations, recurrent income, financial placements, real estate, you name it. Going further, divide each group into revenue categories. For instance, you can organize the Operations group by client name and the Recurrent Transactions by service/product etc. For each you can go as in detail as you wish to.
In Finance you usually work with Fixed and Variable Expenses (Costs). The same may apply for cash flow. You can also add other groups like Salaries, Suppliers, Taxes (mind the different types of taxes: on salaries, income taxation, social and health contributions, VTA etc.). For each of these groups add categories that describe in detail what the expense is about. It helps you to track where the money went and which costs can be cut.
The platform calculates and displays some main indicators that speak about the state of your cash flow at a given moment. They are the key to a good cash flow management, no matter the tool used. Let’s walk through them together:
Current balance: as the name says it, it’s the money you have at that very moment, according to the values you entered as Income and Expenses.
Receivables: it’s the revenue you should cash in (as forecasted and hasn’t entered your accounts yet) until the end of the month/week/day, depending on how detailed the plan view is.
Payables: it’s the opposite of the Receivables - the payments you haven’t yet made and are due by the end of the month/week/day, depending on how detailed the plan view is.
Threshold Time: t’s the period of time, depending on your cash plan view, when you will reach the Threshold value set by you in the beginning. If you set it at 0, then it will coincide with the Zero Cash Date (period, to be more precise). Though you may never reach that value, this indicator keeps you alert about your expenses exceeding the income and the time can function without cashing in.
Cash Deficit: strongly related to the Zero Cash Date, it points out the maximum sum that you lack on a certain date to get back to the threshold value set by you (which can be 0). It is the maximum difference between the Compound Balance and the Threshold Value.
Update The Cash Flow
When working with cash flow data it’s useful to know as many information as possible about each value you entered (what bill it corresponds to, when it was paid/cashed in etc). That’s why when you add values on the ThinkOut cash plan, a window opens and you enter the transaction details: name (Project A Invoice or Salary for Jim), date, currency, labels and whether it happened already or is expected.
For each cell you see the sum of all the transactions set for that time span (month, week or day). Also, if you click on a cell, a window opens displaying the list of all those transactions. To edit the details, just click on the value.
To add a new value, click on a cell. Values are entered as forecasted by default. If the revenue or payment already took place, check the Actual button and they appear in green for Income and yellow for Expenses. This way you can see clearly what is planned and what is already paid/cashed in. If a forecasted value is overdue, it will turn red. Depending on the situation, you either change the planned date or mark it as already happened.
Label the transactions so you can easily filter certain values, say related to a project, a client or a specific bank account. It will help you get a specific view of some particular expenses or revenue streams in the cash plan, by isolating them from the others. The initial and the final balances will only take into account the filtered values.
If the starting balance doesn’t correspond to reality any more (maybe you missed some transactions or you haven’t updated the cash plan in a while), you can enter a new starting balance for the following period. Just click on a cell in the Starting Balance row on top of the cash plan. Keep in mind that once a new starting balance is set, the indicators and the Analytics reports will take into account this new value.
Make a Bank Settlement
You can add transactions directly from your bank account statement by connecting the bank account to the ThinkOut account. In a few steps, you can connect the ThinkOut cash plan to several bank accounts and start importing the list of operations. You’ll need to match the values to the forecasted ones in the cash plan, or just add them as new.
If you already had forecasted transactions, the values from the bank account will appear as actual values in a different color, so you can make the difference between what is yet to happen and what has already been operated.
To connect to a bank account, you’ll use the same credentials as on the online banking platform. You can always delete an existing bank connection (with all the connecting data) or create a new one.
The Bank Settlement helps you to update the cash flow faster and with more accuracy, as you enter the exact values that were operated on the exact dates.
The values that you enter don’t say much by themselves. It is their evolution in time and the structure of your cash flow that give a view about the status of your business and actions to take.
To help you better understand the cash movements, we included compelling charts both on the Dashboard (to see the changes as you fill in the cash plan) and in the Analytics section.
The charts above the cash plan point out the evolution of each cash flow scenario in relation to the Threshold line.
In the Analytics section you can visualize in depth the cash flow structure, the quota of each category and compare the evolution of Income and Expenses.
ThinkOut is not only about planning and forecasting, but also about keeping track of what happens to your company’s cash flow. You can do this in two ways: as a transaction to do list and as changes history log.
The Transactions ”to do list”, as part of the Activity section, displays the overdue and planned transactions for the current and upcoming periods. It’s a great way to be reminded of what needs to be paid or cashed in, so you don’t skip anything important.
As for the operations done in your ThinkOut account, they are recorded and listed in the Events tab of this section. You can check your own modifications (values, dates and other details), but also the changes made by the other users of the account, the ones invited by you.