Cash position
Cash position represents the amount of cash that a company has at a specific point in time. Your cash position is based on the projection of cash receipts from customers who pay outstanding invoices and orders. It’s also determined by the projection cash disbursements that are paid to vendors for purchase invoices and orders.
For the system to accurately predict customer payments, it uses customer payment predictions in Finance insights. Without payment predictions, the projected payment date is calculated by taking the average time that’s required to convert a customer invoice to a payment for each customer. The system calculates the invoice date for open customer orders by using the average number of days for order lines for each customer to be invoiced. Then, the invoice date is used as an input for the payment prediction functionality. Subsequently, each order line’s payment date is calculated by the customer payment prediction functionality.
A similar approach is used to predict payments to vendors. The date of vendor payment is calculated by taking the average number of days that’s required to convert a vendor invoice to a payment. Then, the average number of days is used to calculate the predicted payment date to vendors. For open vendor orders, the system calculates the predicted invoice date by taking the average number of days that’s required to convert lines to an invoice for each vendor. Then, the predicted payment date is calculated by using the average time to convert a vendor invoice to a payment for each vendor.
The Cash position chart, which is located on the Cash position tab, shows cash inflows and outflows and their impact on the total liquidity balance. You can view the chart in the following periods:
- Daily - View forecasts for the next 21 days.
- Weekly - View forecasts for the next 20 weeks.
- Monthly - View forecasts for the next 12 months.
- Quarterly - View forecasts for the next 12 quarters.
Cash flow position helps to make it easier for you to integrate external cash flow data into Dynamics 365 Finance. The data that’s imported from external systems and data that’s already existing in the application are used to create the cash position. Your cash position is created based on customer payment behavior to predict when a company can expect cash to arrive in its accounts.
- For customer orders and invoices, customer payment prediction AI functionality uses historical customer payment behavior to determine when an order or invoice will be paid.
- Cash flow outflow is calculated based on the amount of time that it takes to pay vendor orders or invoices. You can use the average time between shipping, invoice, and paying an invoice to predict when an order or invoice will be paid.