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How cash flow software with bank overdraft works (With automatic overdraft interest)

By Russell Bowyer
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Cash flow forecasting software with bank overdraft functionality

If you don’t want to preparing cash flow forecasts from scratch. Or if you don’t have the skills or time to put together complicated spreadsheet forecasts. Then cash flow software might be the answer you’re looking for. But what about cash flow software with bank overdraft functionality included? Let’s take a look…

Cash flow software with bank overdraft functionality: Cash flow forecasting software with bank overdraft functionality makes it easy to prepare forecasts for your bank manager. If your business needs cash flow projections to forecast overdraft levels required as part of your working capital requirement, it’s important to find easy to use software to save time and effort.

Finding easy to use software is especially important if you’re not used to preparing complicated spreadsheets with Excel or similar.

An important function to have included in cash flow software is to have a bank overdraft facility. But more importantly to have an automatic overdraft interest calculation too. Let’s take a look at how bank overdraft functionality works in practice with cash flow software.

How cash flow software includes a bank overdraft

Cash flow forecasting software with bank overdraft functionality would include the following disclosures as a result of requiring a bank overdraft.

  • Overdraft interest expense will be included under financial overheads on the forecast profit and loss.
  • The cost for overdraft interest will be included as a cash outflow on the cash flow forecast report.
  • The closing balance of any forecast overdraft will be included on the projected balance sheet at the end of each month and period end.

Cash flow forecasting software functionality requirements for bank overdrafts

The type of functionality that should be included in cash flow forecasting software includes the following options:

  • To be able to easily set the overdraft interest rate for automatic calculation on the fluctuating overdraft balance throughout the forecast period.
  • The ability to enter opening balance of any overdraft you had at the start of the cash flow forecast period.
  • The software should be setup to simply report the fluctuations in the overdraft facility during the complete forecast period.

Why do banks want cash flow forecasts?

Banks want to see cash flow forecasts to understand whether your business is able to afford the loan or overdraft facility you’re applying for.

But the cash flow forecast isn’t the only thing of interest to the bank, as they also review your past actions too to help them build a level of trust in your business.

What are the benefits of cash flow forecasting?

Projecting cash flows has many benefits and these include:

  1. Projects cash surpluses and shortages (i.e. overdrafts).
  2. Provides an insight into the effects of any major business changes.
  3. Provides proof to banks your business can afford the lending or overdraft facility.
  4. Helps your business to better manage cash flows.
  5. Is a tool for reviewing business costs.

I hope you enjoyed this article about cash flow software with bank overdraft

I hope this article has helped in someway to solving your question about cash flow forecasting software with bank overdraft functionality included. If you have any further questions, please pop them in the comments below.

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