Advivo Business Advisors and Accountants are Xero Gold Partners and explain how to use Xero to better manage your cash flow
Knowing that cash flow is important is one thing, but having a thorough grasp of where your business stands and what actions you need to take to improve your cash flow is quite another.
Poor cash flow management is one of the main reasons for insolvency amongst small businesses in Australia, with statistics highlighting that more than 80% of businesses fail due to having cash flow issues. With numbers like this, it’s clear that every small business owner can benefit from a window into their cash flow, now and into the future.
Thankfully, Xero has a ‘short-term cash flow’ feature designed for small businesses that want to manage their cash flows better. This feature visually projects your bank balance 30 days into the future, showing you the impact of existing bills and invoices if they’re paid on time. This will help you work out which invoices you should follow up, and see how your cash flow will change if you pay a bill this week versus next week.
How to view your short-term cash flow
The short-term cash flow feature is included with your Xero subscription. Follow these steps to access it:
- In the Business menu, select Short-term cash flow.
- Under Bank accounts included, select one or more bank accounts.
- Under Projection applies to, select Next 7 days or Next 30 days, whichever suits your business.
- Click View projection.
- Move your cursor over the graph to view a daily breakdown of the invoices owed to you, the bills to pay, and the projected balance.
Xero’s short-term cash flow feature will benefit your business by providing a clear visualisation of cash flow coming in and out of the business within the period selected, highlighting any overdue invoices and bills. From here, you will be able to break the project down into Invoices owed to you and Bills to pay. 
While there are many benefits to the short-term cashflow feature, a few shortcomings should be considered. Firstly, this feature does not include payroll expenses beyond the next scheduled pay run, credit notes, transfers between bank accounts or batch payments. It is also limited to a 7 and 30-day view. If you’re after more information, Xero offers a paid upgraded version called Analytics Plus at an additional cost, which includes a 60 and 90-day projection view.
With that said, the problem many business owners currently face is getting on top of their cash flow or working out a more efficient way of getting an up-to-date view of their cash flow without spending hours doing manual calculations. This is where Xero’s short–term cash flow feature can help.
If you would like more tips on how you can get the most out of Xero, contact us today. Our team of Xero advisors in Brisbane is ready to help with training to manage your cash flow better and create efficiency in your business!
