Xero cash flow forecasting, a new tool for your e-commerce store

As an e-commerce business owner, you should make the most of every tool at your disposal. Xero announced at their recent conference that they are soon to provide built-in cash flow forecasting that will make your business decisions more straight-forward and more informed.

We always advocate for Xero as we believe it is the best choice for e-commerce businesses and with this latest tool arriving it is even more essential than before. There is a stark difference between profitability and cashflow so let’s look at how this new tool will help you grow your e-commerce business.

What is cash flow forecasting and how can it help you?

The New York Federal Reserve estimates that 82% of small business failures are due to a lack of understanding or mismanagement of their cashflow. That is a hugely significant number, which highlights the importance of this tool.

Cashflow forecasting looks purely at the money-in/money-out equation. It doesn’t matter how profitable your business is if you are going to be unable to pay the bills. If used correctly, cashflow forecasting can show you the consequences of each transaction and show you when it is optimal for each transaction to occur.

Using cashflow forecasting you can see if there are times you will need to put in more equity to keep your e-commerce business afloat and you can also see if there is a surplus that would be better reinvested on stock or R&D. If you are running a budget (which every business should), cashflow forecasting will help you stay on target, and notice shortfalls before they happen.

Xero cash flow forecasting

Xero has always had scope for cashflow forecasting, through data exports to Excel or integrated apps such as Float, but for the first time, Xero cashflow forecasting is being built into your Xero hub.

What we know

Xero cashflow forecasting is yet to be released, but we do have some information on it. Below is a prototype, shown at the recent Xerocon in Brisbane. As you can see, it gives a clear indication of where your finances are, and where they are likely to be based on predictions from your previous data.

Xero Cashflow Screen

Previously, you could examine cash flow data in segments, which limited clarity and understanding. Xero cashflow forecasting will bring all the pieces together in one easily digestible part of the app.

What Xero cash flow forecasting includes

While we don’t know the full extent of the planned features, we do know that cashflow forecasting will “visually project the user’s bank balance 30 days into the future, showing the impact of existing bills and invoices that are paid on their due dates”.

You will be able to select from your list of bank accounts and switch between a 7-day and 30-day view. You’ll have clear information on the impact of paying a bill or being paid later, so you can make educated decisions on what to pay, and what to chase, when.

Software for cash flow forecasting
Thom Holmes

More information

Xero cashflow forecasting was announced at Xerocon Brisbane 2019, where the prototype was first shown. Further information will be available after the upcoming Xerocon London 2019.

Xero is currently running a pilot with volunteers and is looking at an early 2020 release date.  

What next?

We will be encouraging our clients to use it as soon as it is available and will be walking them through how to utilise the information it creates.

If you would like assistance making the most out of your Xero subscription, or are interested in moving to Xero, get in touch with our team today. All our clients receive a Xero subscription as part of their package and our full support.

The best time to start is now.