Net Cash Flow, Cash Balance, and Cash Account Settings

The Net Cash Flow and Cash Balance columns apply to both the personal and corporate projections. In most projections, the values under these columns should be zero. If they are not, you can find help to address this here:


Net Cash Flow and Cash Balance columns on the Personal Planning page

Net Cash Flow (personal Planning page): The annual amount of cash remaining after meeting the annual Base Expenses (nominal dollars) target. A positive amount indicates a cash flow surplus. A negative amount indicates a cash flow shortfall and the amount by which the Base Expenses (nominal dollars) target could not be reached.

Cash Balance (personal Planning page): This is a generic Cash Account that is used to track the Net Cash Flow accumulated over the years. A positive Cash Balance will grow at a default rate of return and a negative Cash Balance will have interest applied according to the Cash Account settings, adjustable under Scenario Setup -> Settings -> Cash Account

These values will always be zero in the years before the CFM Start Age is reached.

To prevent a Cash Balance once the CFM Start Age has been reached, you can use the Advanced Options.

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Net Cash Flow and Cash Balance columns on the Corporate Planning page

Net Cash Flow (Corporate planning page): The annual amount of cash remaining after all income is received and expenses including salaries, taxes, debt payments, dividends, etc. are paid out. A positive value indicates surplus cash that could not be saved to the Corporate Financial Assets. A negative value indicates a shortfall that couldn't be resolved by the amount of income coming in or by withdrawing from the Corporate Financial Assets

Cash Balance (Corporate planning page): This is a generic Cash Account that is used to track the Net Cash Flow accumulated over the years. A positive Cash Balance will grow at a default rate of return and a negative Cash Balance will have interest applied according to the Corporate Cash Account settings, adjustable on the Corporate Planning page under Scenario Setup -> Settings -> Cash Account

To prevent the allocation of surplus cash to the Cash Balance, or to prevent shortfalls until a specific year in the projections, you can use the Advanced Options.

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The Cash Account/Cash Balance settings

Click  Scenario Setup -> Settings -> Cash Balance from the Personal Planning page or the Corporate Planning page to adjust the settings for the appropriate Cash Account.

The surplus rate of return is based on a long-term assumption of short-term returns as recommended by FP Canada. Here are more details on the projection assumptions. Your past scenarios may have used different settings for the Cash Balance, based on previous recommendations by FP Canada at the time those scenarios were created.

You can adjust the Cash Balance settings for each spouse and the corporation individually.

Advanced Options are detailed below.

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The meaning of pink highlighted years in the projections

Each year of the projections where there is a negative Cash Balance, the row is highlighted in pink on the Personal Planning pages and the Corporate Planning page when default settings are used.  

In the above example, in 2024, the Cash Balance is negative so the entire row is highlighted in pink. Snap was unable to reach the desired spending target and so has in effect taken a loan to cover the shortfall. Interest is applied, and in the following years, Snap continues adding to the loan with the shortfall from each year. Once there are funds available to pay off the negative Cash Balance, Snap does so automatically.  In this example, the Net Cash Flow in 2029 is a positive value of $320,602 indicating a contribution to the Cash Balance to pay off the previous year's Cash Balance value of -$268,781 plus interest. 

If there is a positive Cash Balance in a given year, Snap will spend this money before withdrawing from any of the available Financial Assets to help the client reach the Base Expenses target. Withdrawals from the Cash Balance will be displayed under Net Cash Flow as negative values. Note that the year 2029 is not highlighted in pink because the Cash Balance has been brought back up to $0 in that year. 

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How the Net Cash Flow and Cash Balance values are reflected in the charts and reports

The  Net Cash Flow and Cash Balance values are included in various charts and report sections. Let's use an example to display where to find this information in the charts and reports. 

On the Planning page for this example, you can see the non-zero Net Cash Flow and Cash Balance values in the years 2025 to 2030. Each year there is a surplus of cash (positive Net Cash Flow) that is saved to the Cash Balance. In the year 2030, the Cash Balance is cleared out by a withdrawal of $25,637, which is displayed under the Net Cash Flow column.  

A positive Cash Balance is included as part of the total of all non-registered assets in the Net Worth Chart and Net Worth Projection table.  

A negative Cash Balance is treated as a liability in the Net Worth Chart and under the Total Debts column of the Net Worth Projection table.

The Cash Outflow chart has a Total Inflow dotted line to help you spot shortfalls. Where the Total Inflow dotted line falls below the top of the Cash Outflow bars, there is a shortfall.

Please see this article for more help on clearing positive and negative Cash Balance values.  

In the Cash Flow Projection section of the Report, there is a Net Cash Flow column that displays values from the Net Cash Flow column on the Planning page. Here is a portion of the Cash Flow Projection for this example:

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Advanced Options to prevent a cash surplus or shortfall until a specific year

We've added Advanced Options for both Corporate and Personal projections related to cash flow management.

These settings should be used very carefully because they will impact the cash flow in your projections.

Advanced Options for the Personal Projections

In the personal projections, you can now elect to stop allocating cash flow surpluses and positive cash balances to Financial Assets. Furthermore, you can elect to stop saving surplus cash to the Cash Balance if desired.

This is an Advanced Option because you need to be very careful in changing the default cash flow management settings. It is possible now to disregard surplus cash that could have been used by your clients in their projections. The outcome may be greatly impacted if you use this feature incorrectly.

To access the Advanced Options, click the blue icon in the CFM header on the Planning page.

If you deselect the option to Allocate cash flow surpluses and positive cash balances to financial assets, the surplus cash will be displayed under the Net Cash Flow column rather than being automatically contributed to the Financial Assets.

This allows you to see how much surplus cash is available to the individual each year and this surplus is assumed to be spent. (Note that the surplus is not saved to the Cash Balance by default.)

If you do wish to save this surplus into a Cash Balance, rather than into the Financial Assets, you can select Scenario Setup -> Settings -> Cash Balance and enable the Advanced Option to Accumulate cash flow surpluses.

With this setting checked, the surplus cash is saved to the Cash Balance and spent later in the projections if needed.

In this example, in 2029, the withdrawals from the Cash Balance are displayed as a negative Net Cash Flow value. Cash from the Cash Balance is spent first in the projections, prior to withdrawals being made from the Financial Assets.

Advanced Options for the Corporate Projections

In some cases, you may wish to prevent the accumulation of cash surpluses or shortfalls until a certain year, possibly at the client's retirement age. Under Scenario Setup -> Settings -> Cash Balance click the Show button beside Advanced Options.

You have the option to delay the year to start accumulating surpluses and shortfalls in the projections. One typical use case is to delay the year to start accumulating cash flow shortfalls. This will allow you to contribute to the corporate Financial Assets, without also entering business income to support those contributions.

In this example, on the Corporate Planning page, you can see that the Cash Balance remains $0, even though there are years with a negative Net Cash Flow prior to 2030.

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