Entering initial balance in your finances

If you are forecasting finances for an existing business, you’ll need to enter initial balances, which include assets, liabilities, and equity as of the start of your forecast. These balances provide a reference point, ensuring that your projections reflect your business's actual financial situation.

On the other hand, New businesses do not require initial balances since they are starting fresh. However, if your company is already operating, adding these balances allows for a more accurate financial forecast.

This guide will help you enter initial balances so that your financial reports remain accurate and aligned with your business performance.

You can add your starting/initial balance in the Starting Balances section of the Finance Forecasts module.

Adding Initial Assets:

Your financial forecast should begin with the assets your business already has, including Starting Cash, Accounts Receivable, Long-term and Current Assets, and Starting Inventory.

1

Starting Cash: Enter the total amount of cash available in your bank account at the beginning of the forecast. This amount represents your immediate liquidity.

2

Accounts Receivable: Input the total amount your customers owe you for past sales made on credit. Also, select the number of days it typically takes for you to collect outstanding credit sales.

NOTE: If your business has outstanding invoices or unbilled earnings, make sure to include them here.

3

Long-term and Current Assets: Click on the Add Assets button to enter any long-term and current assets your business owns.

Long-term assets may include property, equipment, or vehicles, while current assets include items like office supplies or prepaid expenses.

4

Starting Inventory: Enter the value of any unsold inventory your business has at the start of the forecast. This ensures inventory-related expenses and revenues are correctly reflected in your financial projections.

TIP: Get started with inventory tracking in your finance module by clicking here.

Adding Initial Liabilities:

Liabilities are financial debts that your business must repay over time. These can be categorized into short-term liabilities, which are due within 12 months, and long-term liabilities, which extend beyond a year. Initial liabilities include Accounts Payable, Income Tax Payable, Sales Tax Payable, and Existing Debt.

1

Accounts Payable: Enter the total amount you owe to suppliers for past purchases made on credit.

Additionally, configure the Days to Pay field to indicate the expected timeline for repayment.

TIP: Accounts payable are unpaid bills your business owes for goods or services received. When you get an invoice from a vendor, it stays in Accounts Payable until it's paid.

2

Income Tax Payable: Input the tax amount that your business needs to pay.

3

Sales Tax Payable: Fill in the amount of sales tax collected but not paid to the authorities yet. This entry helps keep your initial balances aligned with real liabilities.

Sales Tax Payment Month: Pick the specific month when your business will pay the recorded sales tax. This timing ensures the forecast reflects this transaction accurately.

Use the dropdown to select the month when your business will clear its sales tax balance.

TIP: To configure your Sales Tax settings, check out this guide.

4

Existing Debt: Click on Add Debt to enter any outstanding loans, lines of credit, or borrowed money from financial institutions.

Adding Total Equity:

Equity represents the ownership value of a business, reflecting the financial contributions made by the owners and any accumulated profits retained in the business.

1

Paid-in Capital: Enter the amount of money invested by you or other stakeholders in exchange for ownership or equity in the company.

The money contributed by business owners or investors as equity is called paid-in capital. It’s not the same as stock price value and is recorded separately in initial balances.

TIP: For details on how to add paid-in capital to your finances, check out this guide.

2

Retained Earnings: Add the amount of earnings that have been reinvested into the business instead of being distributed as dividends.

Edit the Initial balances:

You can update any initial balance directly in the Starting Balances section by clicking on the relevant field and entering the new amount.

The starting balance represents your business’s Assets (what you own), Liabilities (what you owe), and Equity (capital invested) at the beginning of the plan. Make sure your financials stay balanced by ensuring Assets = Liabilities + Equity.

By entering your initial balances accurately, you ensure that your financial forecast reflects your business’s true financial standing. Whether it’s assets, liabilities, or equity, these starting values provide a solid foundation for planning your future financial performance.