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An introduction to FreeAgent’s Cashflow functionality

This article provides an introduction to FreeAgent’s Cashflow functionality. It explains how the software performs its calculations in order to provide insight into your business’s near-term financial health. To learn more, read our article on how to use FreeAgent’s Cashflow feature.

Please note that this functionality is available to users with level 7 access or above.

FreeAgent calculates the money coming in and going out of your business across a 90-day window to provide a measure of your business’s health and show you a projected future balance.

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How FreeAgent performs its cashflow calculations

FreeAgent uses the following data from your account to perform its cashflow calculations:

FreeAgent only takes transactions and bank account balances that are in your base FreeAgent currency into account. If you have a UK account, your base currency will be GBP. If you have a US FreeAgent account, it will be US dollars and if you have a Universal account, it will be the currency you selected when you first set up your FreeAgent account.

The calculation also takes any active recurring invoices that are due to be created and paid in the next 90 days into account. In the first instance, FreeAgent will use the net amount for these items in its calculation. Once the invoice has been created and either sent automatically or marked as sent, the actual invoice amount will be taken into account instead.

Please note that the Cashflow functionality will include VAT and Corporation Tax liabilities in the outgoing sum it calculates, regardless of whether you’ve paid HMRC. However, you can customise your Cashflow report to hide events that you don’t want FreeAgent to include in its calculations.

The ‘Cashflow’ panel on your Overview screen

It’s important to note that the ‘Cashflow’ panel on your Overview screen in FreeAgent is different to the software’s Cashflow functionality.

The cashflow panel shows the money coming in and going out of your business over different periods of time. You can choose to display the difference between ingoings and outgoings over the last 12, six or three months, using the drop-down menu in the top-right of the panel.

The graph doesn’t include open or overdue invoices and the balance you see on the ‘Overview’ screen only takes historical transactions which have been explained, into account.

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