Forecast the Future with Cash Compass

For many small businesses, cash flow is a constant battle. PaloAlto Software’s Cash Compass provides detailed financial analysis that not only helps small companies monitor their cash flows, but manage their budgets and forecast their futures. Business owners and their accountants who want a better understanding of their cash flow will find Cash Compass to be a useful, insightful program.

Cash Compass performs analysis and creates summaries that go far beyond the cash flow tools found in accounting packages such as QuickBooks. Using Cash Compass, businesses can create forecasts from historical data and compare their actual results to their financial plans. They may also compare planned versus actual expenses, evaluate various financial scenarios — optimistic to pessimistic — review past performance, and analyze cash flow based on data from the balance sheet and profit and loss statements, as well as personnel and sales information. In addition, the program calculates and presents key financial ratios.

The program’s EasyPlan Wizard does an excellent job of guiding users through the process of entering information and offers useful instructions and examples, as well as fairly detailed context-sensitive help. The program provides a series of tables that analyze finances and display the results, and these are linked to automatically update information throughout the program. If you like, you may easily import data from Intuit’s Quickbooks accounting program, a painless way to update the program with your business’ latest financial information.

Once you’ve set up the software and entered your data, the program’s Financial Dashboard screen provides several key business metrics in a single, intuitive view and measures progress. The screen also displays planned, actual, and variance data in financial tables and presents the previous two months, year-to-date, rolling quarter, and the same month in the past year for comparison.

You may choose to have information gathered automatically based on any date. The program also monitors inventory expenses, information that may be used to predict seasonal trends and their effect on cash flow.

The useful Scenario Dashboard screen offers “what if” analysis to explore optimistic, most likely, and pessimistic scenarios for sales, gross margin, operating expenses, capital, cash, and non-cash assets for six years without changing your financial data. The Investment Analysis table provides discounted cash flow analysis and can calculate net present values (NPV) and internal rate of return (IRR). In addition, the sales forecaster is useful for estimating and considering growth rates, seasonal trends, and other factors.

Among the most useful features is an ability to compare financial ratios against those of similar companies, based on Standard Industry Classification (SIC) codes. For this, the program provides an easy wizard that helps you locate an applicable SIC code. When performing ratio analysis, you can see what others in your industry may be spending on inventory by percentage; how many employees they have based on projected revenues; what they spent on marketing by percentage; a relative sense of their initial cost per unit and more.

From what I recall from MBA school, ratio analysis is all about comparing your business to similar businesses. It’s what banks do when they evaluate the fiscal health of a firm. I was impressed with this feature.

The program lets you save any plan, or part of a plan, and create templates for later use. In addition to financial reports, the program generates charts and graphs. Key charts depict planned versus actual sales and expenses, past performance, cumulative yearly finances, profits and more. You may adjust a chart’s style, type, text, font, colors, and other elements. And after performing analysis, the program can merge tables and charts and format organized and attractive reports that may be printed.

For those who are working on business plans, the program can import information from PaloAlto’s own Business Plan Pro, a business plan writer. Cash Compass also exports data to Microsoft Word, Excel, PDF and HTML.

If you would like to perform analysis with other users, the program provides e-mail-based collaboration features that let several people work together to develop and analyze a plan from different locations. A tracking feature shows who modified a section and when the modification was performed. And when a group receives a component, members may choose to accept, reject, or further modify the section.

Test Drive
I evaluated a final version of the program that, while complete and available for sale from PaloAlto Software, did not come with a user’s guide. However, I found the program easy to set up and use.

The program installed without any problems and I found its step-by-step setup wizard helpful in beginning my analysis. Cash Compass asked several questions to configure the financial structure of my business and considered such aspects as non-profit status, the existence of inventory, selling on credit and more.

I found that the program provided helpful instructions and did a great job of creating a comprehensive set of financial tables and charts. Each page, which may be selected from an outline, featured comprehensive and clear explanations. The outline itself provides an easy way to navigate and select the various analyses that the program offers. Also, I found the program’s help to be detailed and useful.

It was easy to import financial data into Cash Compass from Intuit’s QuickBooks — the program asked whether I wanted to import data from QuickBooks during the setup and offered an additional wizard for performing this task.

Bottom Line
Cash Compass is available for $249 and supports Windows XP (Home Edition or Professional), Windows NT 4 and 2000 Professional and Windows 98 and ME. PaloAlto Software offers technical support via e-mail and phone.

For cash flow analysis that goes beyond the capabilities found in accounting programs, Cash Compass delivers powerful evaluation tools. Small businesses that want a better handle on their cash flow and can’t find these capabilities in their accounting software should consider Cash Compass.

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