What are outstanding balances?
Outstanding balances are forecasts that you had estimated would come in on a certain date, but after that date have not materialized. Imagine that you had a payment forecast that should have come in yesterday, but for whatever reason this payment has not yet been made; updating outstanding balances in your cash flow forecast you should update the future date on which it will come in, so that you continue to count on that future payment and avoid surprises when it actually comes in.
For example, if you have a balance in your bank accounts of $5,000, and you expect to pay office rent of $1,000 in the middle of this month, your forecast will indicate that you will end the month with a total bank balance of $4,000.
If the office payment has not yet been received by January 20, the forecast date has passed but the payment may be received at any time, so you must assign a new rent payment due date, in this example, the end of the month. This way, when the payment comes in, you won’t get a surprise because you were still contemplating it in your forecast.
As you can see, by not updating the date of your forecast, you expect to end the month with €5,000 in cash, which is wrong. However, by updating your forecast date to when you think the payment will come in, you update your cash flow forecast to correctly forecast ending the month with €4,000 of cash in the bank.
Orama automatically identifies and collects those forecasts where the due date has been met but the corresponding collection or payment has not been received, so you can update the due date and not miss anything.
How do I update the outstanding balances in Orama?
In this Pending Balances section you will find the expected payments/collections that you have not yet paid/collected so that you can decide what to do:
- Change the planned date to later (because you know it has simply been delayed). This will cause your forecast to be updated.
- Forgive the amount because the expected amount will not be paid/collected in the end. This will make it disappear from your forecast.
Both the change of date and the remission can be made on the total amount or on a part of it.