Within the Fathom forecast, Profit & Loss accounts can be given a timing rule to represent how quickly a Profit & Loss account is transformed into cash. These can be saved to the heading/subheading level, or applied at the individual account level. You can leverage the following timing cadences within a Fathom forecast.
A timing rule tells Fathom how quickly (or slowly) you are expecting to transfer a revenue or expense account into cash on the Balance Sheet. For example, 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.
All timing rules are automatically set to ‘immediate’, which means we are expecting to collect the cash or pay the cash in the same month the revenue or expense was recorded. These can be modified at the classification, custom heading or account level, for ultimate control over your forecast. If the default settings match the timing profiles of your business, these may not need to be changed.
You can view the impact of timing rules on their linked accounts (and any cash implications) by using the ‘three dots’ icon next to the rule and entering the preview panel.
Create or Edit a Timing Rule
To edit or change the timing rule of an account:
- Click on the baseline level of any account to open the properties panel on the right hand side of the screen
- Select the ‘three dot’ icon to edit the existing timing rule or add a new timing rule to the account.
- To add additional months to the month spread, hit the green ‘+’ button and type in the percentage of the monthly amount to transfer into cash during that month.
💡Pro Tip: You can add prior months for prepayments or accruals by using the three dot/ more options/ ellipses menu to the right of the green ‘add a month’ plus sign.
As you update the timing profile, you will see the bar graph distribution update to show the accurate cash timing profile. This gives you complete control with respect to the distribution, controlling the cash flow impact of all business activities and furthering your ability to accurately plan for events and different scenarios with precision.
❗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.
Quarterly Expenses (eg. Rent Payments)
Our recommended approach is to record the rent monthly (ie. amortise) in your profit and loss and use the timing profile for that account to ensure that the payments are recognised quarterly in your balance sheet.
For example if you are paying $6,000 rent every quarter, you would create a 'Constant' value rule on the account that puts $2,000 in each month. The accompanying timing profile for that account would be a 'Quarterly' timing profile:
This means that 100% of the amounts from each quarter will flow to your cash account on the appropriate month in the quarter. You can view the P&L movements in the cash account on your balance sheet to verify this has occurred.