Chapter 5. Foretelling - Budgeting and Cash Flow Management

Accounting rules are based on faits accomplis but companies need to anticipate/predict events. Dynamics NAV offers some tools that can help to accomplish this, which we will cover in this chapter:

• Budgets

• Cash flow management

Budgets

Budgets are an overview of planned costs, revenues, and resources over a specified period of time. Dynamics NAV allows you to create budgets for fixed assets, items, sales and purchases, and projects. But we will focus on general ledger budgets in this section.

With the general ledger budget feature, you can create multiple budgets for the same time periods, simple or complex budgets by selecting combinations of G/L accounts, periods, and dimensions. You can also copy budgets from previous periods or create your budgets outside the application, with Excel, and then import it into Dynamics NAV.

Creating budgets

Let's create a new budget for the first quarter of 2017. Perform the following steps:

1. In the Search box, type G/L Budgets and select the related link.

2. Once on the G/L Budgets page, click on New on the ribbon bar. Create a new budget with the values shown in the following screenshot:

   

3. Click on the Edit Budget option found on the ribbon bar.

4. In the View by field, select Month.

5. In the...

Cash flow management

Understanding the flow of incoming and outstanding cash is vital for any company. We need to know if we will have enough money to pay creditors and expenses when they are due. This is actually what the cash flow management functionality will tell us. We will see how to do this in this section.

The cash flow management functionalities analyze several sources of information to be able to predict cash needs. The sources that this functionality uses are as follows:

• General ledger: This uses information about the liquid funds and also about the budgets we have seen in the previous section

• Purchases: This uses information about the current payables and also forecasted information taken from open purchase orders

• Sales: This uses information about the current receivables and also forecasted information taken from open sales orders

• Service: This uses information about open service orders

• Fixed assets: This uses information about planned disposal and budgeted purchases of fixed...

Summary

In this chapter, we saw the tools that can help companies in the task of predicting and anticipating financial events. You learned to create new budgets using different sources of information. You can manually introduce budgeted amounts, copy it from real general ledger entries with an adjustment factor, or import it from Excel. You also learned how to predict cash needs by analyzing several sources of information, such as liquid funds, receivables and payables, outstanding orders, and budgets.

So far, we have come across sales and purchases, bank account management, and different accounting processes. In Dynamics NAV, everything leads to accounting, but most of the operations inside the financial management area can be done with little accountancy knowledge. In the next chapter, we will learn the setup options that allow this to happen.