Net Cash Flow, Cash Balance, and Cash Account Settings

The Net Cash Flow and Cash Balance columns are applicable 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:

In this article:

  1. Net Cash Flow and Cash Balance columns on the Personal Planning page
  2. Net Cash Flow and Cash Balance columns on the Corporate Planning page
  3. The Cash Account/Cash Balance settings
  4. The meaning of pink highlighted years in the projections
  5. How the Net Cash Flow and Cash Balance values are reflected in the charts and reports
1

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 After-Tax Spending (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 After-Tax Spending (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.

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2

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 Capital 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 Capital 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

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3

The Cash Account/Cash Balance settings

Click Scenario Setup -> Settings -> Cash Account 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 Account, based on previous recommendations by FP Canada at the time those scenarios were created.

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

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4

The meaning of pink highlighted years in the projections

Every year of the projections where there is a negative Cash Balance is highlighted pink on the Personal Planning pages and the Corporate Planning page.    

In the above example, in 2027, 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 the following year Snap automatically pays off the negative Cash Balance if it is able to. The Net Cash Flow in 2028 is a positive value indicating a contribution to the Cash Balance of $49,493 to pay off the loan, including interest. 

If there is a positive Cash Balance in a given year, Snap will spend this money before withdrawing from any of the available Capital Assets to help the client reach the After-Tax Spending target. Withdrawals from the Cash Balance will display under Net Cash Flow as negative values. Note that the year 2028 is not highlighted in pink because the Cash Balance has been brought back up to $0 in that year. 

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5

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 2021 to 2027. Each year there is a surplus of cash (positive Net Cash Flow) that is saved to the Cash Balance. In the year 2027, the Cash Balance is cleared out by a withdrawal of $26,867, 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 Projections table.  

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

The most obvious representation of the Net Cash Flow is in the After-Tax Spending chart.  Net positive cash flow is displayed as a Surplus and net negative cash flow is displayed as a Shortfall

The shortfall indicated at age 65 (in 2027) represents the withdrawal from the Cash Balance.  This may be confusing to you or your clients so we suggest that you don't use the Cash Account for automatic savings but rather allow Snap to save the surplus in the Capital Assets. For help with this, see this article: 

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