You’ve probably heard the quote that most business failures are due to a lack of cash flow, not a lack of sales. On a deeper level, it’s usually because of a lack of awareness of the cash flow picture as a whole—everything that is coming in and everything that is going out—not just what has been invoiced. Cash flow forecasting and reports can give you that overall big picture, so you can make business decisions quickly and prevent surprises at the end of the month.
Cash flow forecasting accounts for every dollar that you expect to come in or go out of your company, including overhead costs like office space, purchasing, payroll, etc. Cash flow forecasting reports can be done on a monthly, weekly, or even daily basis. In the past, it’s been done manually, which was a ton of work for accounting departments.
Cash flow forecasting reports can help you:
- More accurately predict and manage your cash flow
- Give you early warning about potential cash flow discrepancies
- Identify and problem-solve cash shortages before they happen
- Identify and plan what to do with surpluses
- Consider “what if” scenarios and develop mitigation strategies
Luckily, you don’t have to hire an extra accountant just to do cash flow forecasting—Microsoft Dynamics 365 Business Central can do it for you!
In a recent Coffee with Chris Webinar, our resident Business Central expert went over all the ins and outs of how to set up cash flow forecasting in Business Central.
Get Started with Cash Flow Forecasting Reports in Business Central
Cash flow forecasting is a feature that’s built right into Business Central, so there’s no need to download anything new—all it takes is a few clicks to set up. If you have everything else set up in Business Central, it’ll pull in your starting balance, you’ll add all your GL accounts, and you can also add manual costs that aren’t always set up for AR/AP. Things like investment dividends, expected income and sales, grants, assets, etc. It can be programmed to update on whatever frequency you prefer, daily, weekly, monthly, or longer. At the end of the month, you can easily compare your forecast to the actual numbers from the month and plan more precisely for the future.
You can also adjust individual entries in the forecast manually. If you know there’s a problem or delay with an invoice, you can account for that. You can also account for payments that you know come in late. Even if they say net 30, but they never pay until net 60, your forecast can take that into consideration.
One of the most useful features of cash flow forecasting in Dynamics 365 Business Central is that it automatically gives you a visual representation of your forecast, so you can drill down into each category and see how it stacks up against your overall forecast and your actual spending.
Frequently Asked Questions: Cash Flow Forecasting in Business Central
What is cash flow forecasting in Business Central?
Cash flow forecasting in Microsoft Dynamics 365 Business Central uses real-time financial data to project future cash inflows and outflows.
- Combines receivables, payables, and liquidity accounts
- Helps predict cash shortages or surpluses
- Supports proactive financial planning
How does Business Central calculate cash flow forecasts?
Business Central builds forecasts using existing financial data and planning inputs.
- Open sales invoices (incoming cash)
- Purchase invoices and expenses (outgoing cash)
- General ledger entries and recurring journals
- Manual forecast adjustments
This creates a forward-looking view of cash position based on actual transactions.
How do you set up cash flow forecasting in Business Central?
Setting up forecasting requires configuring core components within the system.
- Define cash flow setup and accounts
- Assign payment terms and due dates
- Configure cash flow worksheets
- Update forecast entries regularly
In most implementations, proper setup determines forecast accuracy more than the tool itself.
What are the benefits of cash flow forecasting in an ERP system?
ERP-based forecasting provides more accurate and timely insights than spreadsheets.
- Real-time visibility into liquidity
- Reduced reliance on manual data consolidation
- Faster financial decision-making
- Better alignment between finance and operations
How accurate is cash flow forecasting in Business Central?
Accuracy depends on data quality and process discipline.
- Strong AR/AP data improves projections
- Accurate payment terms increase reliability
- Regular updates reduce variance
- Forecasting improves over time with usage
A common issue companies face is relying on outdated or incomplete data rather than the system itself.
What are common mistakes when forecasting cash flow?
Most forecasting issues come from process gaps, not system limitations.
- Ignoring overdue receivables
- Not updating forecasts regularly
- Over-relying on static spreadsheets
- Failing to align forecast with actual operations
In real-world deployments, companies that treat forecasting as a continuous process see significantly better results.
Can Business Central integrate cash flow forecasting with other tools?
Yes. Business Central integrates directly with Microsoft tools for deeper analysis.
- Power BI for dashboards and visualization
- Excel for scenario modeling
- Microsoft 365 for collaboration
This creates a connected financial planning environment rather than isolated reporting.
When should a company start using cash flow forecasting in Business Central?
Most companies benefit once financial complexity increases.
- Growing transaction volume
- Multi-entity or multi-location operations
- Tight cash flow or working capital pressure
- Need for proactive financial planning
At this stage, forecasting shifts from optional to operationally necessary.
Watch the Video to Learn More About Cash Flow Forecasting
In the episode of Coffee with Chris below, he explains how to set up your cash flow forecast in Business Central and gives some tips and tricks to help you get the most out of the system. Setting up a cash flow forecast could be the difference between your business's long-term success and premature failure.
Business Central can also connect with a machine learning API, your preferred tool, or Microsoft Azure, to give you even more insights into your forecast. The machine learning component will analyze your last two years of data, compare it against your current data, and give you extra insights and predictions that will help you make even stronger business decisions.
Watch the webinar below and get your business on track for resilience and growth with automatic cash flow forecasting.
