How to forecast accruals

Timing profiles represent how quickly a revenue or expense is received or paid out as cash as compared to when the revenue or expense is recognised on the Profit & Loss. All timing profiles are automatically set to ‘immediate’, meaning the revenue, cost of sales, or expense is expected to be paid out or received as cash in the same month it is recorded on the P&L.

For example, usually, a restaurant’s revenue is all collected immediately when you pay with a credit card. In this case, you would want to indicate that 100% of the revenue is collected to cash within the same month.

Timing profiles can be set at the classification, heading, or individual account level.

Types of timing profiles

You can leverage the following timing cadences within a Fathom forecast.

Monthly
Bi-Monthly
Quarterly
Bi-Annually
Annually

Creating or editing a timing profile

To edit or change the timing profile of an account,

Click on a cell for the baseline level of any account to open the properties panel on the right hand side of the screen
In the timing profile section, the second white box section, select the ‘Three dot’ icon
Select to ‘Add a new rule’ or ‘Edit an existing rule’

❗Note: Because one timing profile can be set at the classification or heading level, if you select the option the ‘Edit an existing rule’, you may be editing the timing profile for multiple accounts. The edit option will state if the rule is applied to multiple accounts or a single account.
Choose a timing profile from the dropdown menu.
- Monthly: To add additional months to the payment spread, hit the green ‘+’ button and type in the percentage of the monthly amount to transfer into cash during that month.
- Bi-Monthly (every two months): Designate the starting months for the bi-monthly segments. Move the dot along the timeline to designate when the cash amount is to be paid or collected (before, during, or after the two month segment).
- Quarterly: Designate the starting months for the quarters with the drop down menu. Move the dot along the timeline to designate the month before, during, or after a quarter ends for 100% of the amount collected over the quarter to be transferred into cash.
- Bi-Annually (twice a year): Designate the starting months for the half year segments. Move the dot along the timeline to designate when the cash amount is to be paid or collected (before, during, or after the start of the 6 month segment).
- Annually: Designate the starting month of the year with the drop down menu. Move the dot along the timeline to designate the month before, during, or after a quarter ends for 100% of the amount collected over the quarter to be transferred into cash.

💡Pro Tip: When using a monthly timing profile, you can add prior months for prepayments or accruals by using the ‘Three dot’ icon to the right of the green ‘add a month’ plus sign.

❗Note: Fathom will warn you if the total amount is less than or more than 100 percent with a red warning. You cannot have an amount less than 100 percent.

Monthly, quarterly, and yearly payment schemes

Monthly timing profile

Example: A dental office may collect revenue as cash over a period of 2 months with 65% of the revenue received as cash within the same month and the remaining 35% received as cash in the next month.

The ‘Monthly’ timing profile option would be chosen with the ‘Same Month’ set to collect 65% of the revenue recognised on the P&L that month and 35% of the revenue set to be collected in ‘Month 1’.

Quarterly Timing Profile

Quarterly example: A business is paying $6,000 in rent before the start of every quarter. On the P&L, a 'Constant' value rule would be used to record a constant monthly amount of $2,000 for the ‘Rent’ account.

The accompanying timing profile for that account would be a 'Quarterly' timing profile, with the payment timeline set for 100% of the rent for the quarter to be paid in the month before the quarter starts.

Yearly Timing Profile

Annually example: A company has a $36,000 annual contract with their consulting firm, according to which they pay 100% of the yearly expense in the first month of the year. The contract begins in October. On the P&L, a 'Constant' value rule would be used to record a constant monthly amount of $3,000 for the ‘Consulting Fees’ expense account.

The accompanying timing profile for that account would be an ‘Annually' timing profile, with the payment timeline set for 100% of the consulting fees for the year to be paid in the first month of the year.

Viewing the impacts of a timing profile

You’re able to view the amounts impacting the Balance Sheet from the Profit & Loss based on the selected timing profile. To do so,

Click on a cell for the baseline level of any account to open the properties panel on the right hand side of the screen
In the timing profile section, the second white box section, select the ‘Three dot’ icon
Select the ‘Preview cash timing impact’ option

A window will open where you can view the impacted Balance Sheet accounts, the amounts going into or coming out of those Balance Sheet accounts, and the months in which those amounts are transferred. If there is a consumption or sales tax at play, then the amounts going toward sales tax liability will also be recorded.

💡Pro Tip: You can view the how the timing profiles have contributed to the calculation of a Balance Sheet account by viewing the 'Balance Sheet layer detail'.

Next steps

Continue the 'Forecast Creation & Setup Workflow' by choosing from one of the next steps below:

What you want to do:	Where to go next:
Set up taxes and account linkages and your forecast	Forecast Settings
Set up loans, depreciation, and inventory in your forecast	Journals & Schedules
Track the performance of key metrics throughout your forecast	Quick Metrics

Additional knowledge & common questions: