Table of contents
2.1 ‘Days cash on hand’ calculation
4. Adding a loan account in Clear Books
5. Explaining loan repayments in Clear Books
1. Introduction
For businesses on the Large or Small subscription plan and with over 6 months of transactions in Clear Books, the ‘Bank accounts’ widget on the Dashboard > Overview menu will provide cash insights based on your ‘Days cash on hand’ - the number of days that a business can continue to pay its operating expenses without further cash input. A message will also be shown on the Aged debtor report if appropriate. Users can explore financing options on the Tools > Financing menu.
We've partnered with Capitalise, the online lending marketplace, to help you quickly compare 100+ lenders for business loans.
Capitalise is a company that helps UK firms access business finance, working directly with businesses and their advisers. They are trusted by over 2,000 accounting firms advising on more than £1bn of approved capital to their clients. Capitalise is a credit broker and not a lender.
https://capitalise.com/2. Cash insights
If you have a ‘Large’ or 'Small' subscription and over 6 months worth of transactions, we will display the “Days cash on hand” insight on the ‘Bank accounts’ widget on the Dashboard > Overview menu. This insight will help highlight the state of your finances based on the number of days for which you have the cash to cover operational costs.
It’s really important to keep you bank reconciliation as up to date as possible to get the best analysis from the cash insightsDepending on your cash position and operational expenses in the past year, the Days cash on hand insight will show the different statuses position as described below:
Green
Looking healthy.
Some businesses with substantial cash over an extended period may consider investing or financing to fund business growth.
Amber
Stay cautious.
Your cash reserves should cover 53 days of operating costs, but may leave you in a financially fragile position.
Follow up with your debtors and monitor your cash position. Consider if you need a bridge loan.
Red
Warning: increase cash position
Your current cash position is unlikely to cover the next 30 days' expenses. Follow up with your debtors and consider if you need a bridge loan.
2.1 ‘Days cash on hand’ calculation
This is calculated as cash available ÷ (annual operating expenses ÷ 365 days). Cash available is calculated using the cash representation in your bank accounts in Clear Books, and does not include unexplained transactions. Operating expenses are calculated using payments on P&L expense account codes and excludes any asset depreciation.
2.2 Aged Debtors
On the Aged debtor report, Reports > Popular reports > Aged Debtor, we also provide an insight message.
This message will display if the total amount overdue surpasses 1 month's worth of your company's previous year's revenue (rolling 12 months prior).
You can dismiss this message using the [X], we'll remind you again at the beginning of the next month if this still applies.
3. Financing
You can start a financing search by navigating to the Tools > Financing menu. To access the Capitalise search and options just click on the ‘Compare financing options’ button.
The consent form will then be displayed and will ask whether you would like to share some of your Clear Books data with Capitalise or just to proceed to Capitalise without sharing:
The capitalise menu will provide you with an option to begin your search for the best financing options. Capitalise then provides a questionnaire to tailor your search to your company situation.
4. Adding a loan account in Clear Books
If you have been approved for a loan, you can add this into Clear Books as a bank account on the Money > Bank accounts menu. Just click on the ‘Add account’ button.
On the Account type screen, click on the add link beside the Loan account option.
Finally add the name of the loan and save.
Once you receive your loan into your business account, and you import your statement, you can explain the full loan payment received as a transfer from the loan account.
5. Explaining loan repayments in Clear Books
Once you start making repayments on the loan you can record these in Clear Books using the bank explain screen.
In this example, a loan account has been created with an opening debt of £10,000. I will now be explaining a repayment, on an imported statement, of £1,100 which includes 1% interest.
Navigate to Settings > Accounting > Account Codes.
Make sure that your loan (bank account) account code has the check box beside 'Show in purchases' ticked and hit the 'Update' button at the bottom.
Navigate to Money > Bank accounts.
Click on the ‘Explain’ link beside the imported statement, and then find and click on the loan repayment transaction on the statement.
Select the loan account name in the ‘To’ box. Explain the interest charge by changing the figure in the ‘Amount’ box to the interest amount, £100 in this case, and choose an interest account code (the default system code is interest expense). Hit the ‘Add new transaction’ button to partially explain this payment.
Now explain the remainder, £1000 in this case. Select the loan account name in the ‘To’ box. Select the loan (bank account) account code in the ‘Account’ drop down box. Hit the ‘Add new transaction’ button to explain the second part of the payment.
An automated warning will appear as you usually won't pay a bank. Clear Books has an inbuilt rule to recognise transactions that are explained in this way and warn against it. In this case, you can ignore the warning and confirm, by re-hitting the 'Add new transaction' button.
The payment will list the two explained parts. Hit the ‘Add transactions’ button to complete.
Capitalise is authorised and regulated by the Financial Conduct Authority. Clear Books' relationship with Capitalise is limited to that of a business partnership, no common ownership or control rights exist between Capitalise and Clear Books.