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FAQ: How can I model a reduction in my AR/ AP days?
FAQ: How can I model a reduction in my AR/ AP days?

Learn how to model Accounts Receivable and Accounts Payable days in Fathom Forecasting

Updated over a week ago

Many businesses find it useful to model different collection periods across their revenue accounts, and different payment timelines across their expense accounts. This allows businesses to optimise their collection and payment timelines in order to free up cash more quickly in their business and use this capital in new ways.

Fathom allows you to modify and model these calculations quickly and effectively by setting up different scenarios and overriding the baseline timing profiles inherited from the baseline forecast.

To create a new scenario you'll just want to click on the ‘Thought Bubble’ icon and hit ‘+ Create New Scenario’. Once you’ve given it a name and added any microforecasts you may want, you can then head back to the main grid and re-configure your timing profiles.

A timing profile 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.

To override your timing profiles and set a new distribution for payment or collection in a scenario:

  1. Click on the account or heading that you’d like to modify the timing profile

  2. Use the ‘three dot’ overflow menu to ‘Start New Profile’. This will apply a different timing profile to this specific scenario.

You can then toggle between the different scenarios and financial outcomes, as well as report and visualise the different outcomes in our reporting integration.

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