For many small businesses, cash flow is a constant battle. Palo Alto Software's Cash Compass ($249) provides detailed financial analysis that not only helps firms monitor their expenditures, but manage their budgets and forecast their futures. Business owners and their accountants who want a better understanding of their companies' financial health will find Cash Compass a useful, insightful program.
You can find cash-flow tools in accounting packages like Intuit's QuickBooks, but Cash Compass performs analysis and creates summaries at a considerably more sophisticated level. Using Cash Compass, companies can create forecasts from historical data and compare actual results to financial plans. They can also compare planned versus actual expenses, evaluate financial scenarios ranging from rosy to pessimistic, review past performance, and analyze cash flow based on balance-sheet data and profit-and-loss statements as well as personnel and sales information. The program also calculates and presents key financial ratios.
An EasyPlan Wizard does an excellent job of guiding users through the process of entering information, with useful instructions and examples accompanied by fairly detailed, context-sensitive help. A series of tables, linked to automatically update data throughout the program, analyze finances and display the results. For a painless way to input your company's latest financial info, you can easily import data from QuickBooks. (The program can also import data from Palo Alto's popular business-plan writer Business Plan Pro and export to Excel, Word, PDF, and HTML.)
Where Does It All Go?
Once you've set up the software and entered your data, a main Financial Dashboard screen presents several key business metrics and measures progress in a single, intuitive view. The screen shows planned, actual, and variance data in financial tables and presents the previous two months, year to date, rolling quarter, and last year's results for the same month for comparison. Cash Compass also monitors inventory expenses, which can be used to predict seasonal trends and their effect on cash flow.
The useful Scenario Dashboard offers what-if analyses to explore most likely, optimistic, and pessimistic projections for sales, gross margin, operating expenses, capital, cash, and noncash assets for six years, all without changing your actual financial data. An Investment Analysis table provides discounted cash-flow analysis and can calculate net present values and internal rate of return. There's also a sales forecaster that's useful for estimating and considering growth rates, seasonal trends, and other factors.
Among the most useful features is an ability to compare your financial ratios against those of similar companies, based on Standard Industry Classification (SIC) codes. After using a helpful wizard to locate an applicable SIC code, you can see what others in your industry may be spending on inventory and marketing by percentage; how many employees they have based on projected revenues; a relative sense of their initial cost per unit; and more.
From what I recall of MBA school, ratio analysis is all about comparing your business to similar firms -- it's what banks do when they evaluate the fiscal health of a company. I was impressed with this feature.
See It All
Cash Compass lets you save any plan or part of one and create templates for later use. Key charts depict planned versus actual sales and expenses, past performance, cumulative yearly finances, profits, and more. You can adjust chart styles, text fonts, colors, and other elements. When analysis is done, the program can merge tables and charts into attractively formatted and organized, printable reports.
You're not a sole proprietor? Cash Compass offers e-mail-based collaboration features that let people work together to develop and analyze a plan from different locations. A tracking feature shows who modified a section and when; team members may choose to accept, reject, or further modify a submitted component.
Even without a printed user's guide, I found Cash Compass easy to set up and use, with a step-by-step setup wizard to kick-start my analysis. The program asked several questions to configure the financial structure of my business, and considered aspects ranging from nonprofit status to selling on credit en route to creating a comprehensive set of financial tables and charts. An on-screen outline provides a simple way to navigate the various analyses available, with clear and comprehensive explanations available for each.
For cash-flow analysis that goes beyond the capabilities of accounting programs, Cash Compass delivers powerful evaluation tools. Small businesses that want a better handle on their cash flow should consider it $249 well spent.
