Cash flow software with interest expense included
Cash flow projection software with interest expense functionality
Looking at the results on the Google search for ‘cash flow software with interest expense‘, it appears that many relate to a cash flow statement and others to expense management software. But I don’t think that’s what people are searching for, hopefully you included. What I think you are looking for is cash flow software that includes interest expense calculations and functionality. Let’s take a look…
Cash flow software with interest expense included: Cash flow software with interest expense functionality will include an automatic overdraft calculator together with an interest calculator for loans and hire purchase contracts over the projection period. The automatically calculated interest will be included on the cash flow forecast and profit and loss reports.
The importance of including interest in cash flow forecasts is that often times the reason for preparing the cash flow forecast report is for the purpose of obtaining finance from a bank. The bank manager reviewing the cash flow forecast reports would expect to see an interest expense in the reports.
If I am right in my opening statement to this article, and if you are looking for cash flow software that includes interest expense functionality, you would want this to be an automatic function within the software.
I’m assuming you’re not looking to create your own spreadsheet template from scratch to deal with the interest expense along with the other complications associate with preparing cash flow reports.
How cash flow software includes interest expense
Where cash flow software includes interest expense calculations and functionality, the figures for interest costs will be dealt with as follows in your forecast reports:
- The interest expense will be included on the forecast profit and loss report under financial overheads.
- The same amount for interest expense will usually be included on the cash flow forecast report. However, this will either be included as a separate cash flow item or it will be included within the total loan repayment. How this is shown on the cash flow forecast will depend on the type of interest expense and the type of loan. The cash flow software needs to be able to manage all types of loan functionality, as some loans are interest only, where as others are capital and interest.
- The loans, hire purchase or bank overdraft to which the interest expense relates will also be disclosed on the projected balance sheet as well. These amounts will be split between amounts due with one year, and amounts falling due after more than one year where applicable.
- Where your business use invoice factoring, the interest expense on this type of loan will also be included on the above reports. Plus the invoice factoring balance will be included on the balance sheet too.
Cash flow forecasting software functionality requirements for interest expense
The type of functionality that should be included in cash flow forecasting software includes the following options:
- To be able to enter the loan advances or lump some payments in any month within the forecast period.
- To be able to enter the specific interest rate for the loan.
- The term of the loan in months.
- The month of the first loan or hire purchase repayments.
- Whether or not the loan is paid-off in lump sum payments.
- Any final lump sum payments for loans.
- A specific monthly payment amount for the loan
- Functionality to be able to chose whether the interest is charge to the loan or directly to the cash flow.
- The ability to enter opening balance of any loans, hire purchase or overdraft.
- To be able to enter a specific name for the loan, which is usually the lender’s name.
- Full factoring receivables functionality if this is the type of funding your business is using or is planning on using to fund working capital requirements.
- To have an automatic overdraft interest calculation and to be able to set the overdraft interest rate.
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