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Cash Flow Forecasting

To generate a cash flow forecast in a subscription business such as SaaS, you project three different sources of cash.

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Team Maxio

May 21, 2019

How do you forecast cash flow in a subscription or SaaS business?

To generate a cash flow forecast in a subscription business such as SaaS, you project three different sources of cash in:

  1. Cash from invoices from existing customer subscriptions

  2. Cash from invoices from future renewed subscriptions

  3. Cash from invoices for new contracts (new sales/contracts)

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Sources of Cash In

1. Cash from Existing Subscription Contracts

Your AR report is typically the source for this cash source. However, your AR account does not typically include invoices that are scheduled in the future, for example when you arrange for quarterly or monthly invoicing for an annual subscription.

2. Cash Projection from Future Renewed Contracts/Terms

You can’t get this from your AR system, so most companies turn to a spreadsheet. Maxio enables you to easily project future renewals AND the invoicing schedules for the future renewals from the existing transactions that are stored, eliminating the need to manage this in a spreadsheet.

3. Cash Projection from New Contract (new sales/contracts)

Your sales team and CRM/SFA system will help you project new sales but not the invoices needed to forecast cash in. Financial accounting systems are designed to deal with real transactions. You turn to a spreadsheet and simple models. SaaS Optics can project invoices at an aggregate sales forecast level, or at a detailed customer transaction level.

Managing a spreadsheet with these three streams gets impossibly complicated as your transaction volume goes from a few to a few dozen to a few hundred. Maxio makes forecasting cash flow easy, relieving you from constant spreadsheet data management and programming, ensuring you have the most accurate cash flow forecasts whenever you need them.

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What to read more? Get Data-Driven Pricing Strategies

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