Connectorly produces reliable future cash flow forecasts by building on financial data directly from Xero. Here’s a clear breakdown of how the forecasting engine works so you can better understand and trust the numbers driving your Power BI dashboards.
🧾 Step 1: Generate all unpaid Invoices and Bills
Forecasting is driven by unpaid Invoices and Bills. These include APPROVED (likely with a customer or waiting to be paid by you) and SUBMITTED and DRAFT (which have not yet been sent to a customer or internally approved for paying). Already-paid items are excluded (since those won’t be paid again).
These are augmented with future Repeating Invoices and Repeating Bills that have been set up in Xero. These future invoices respect the frequency of the schedule and any planned end dates. Repeating Invoices and Bills represent recurring revenue (e.g. monthly client retainers) and recurring costs (e.g. wages, rent, VAT).
đź“… Step 2: Generating Future Invoices and Bills
Connectorly uses these Repeating Invoices and Repeating Bills to automatically generate future-dated invoices and bills, providing a foundational view of what’s likely to occur. These are visible alongside APPROVED, PAID, SUBMITTED and DRAFT invoices, and have a status of FORECAST.
đź’ˇ Best Practice
To enhance forecast accuracy, we recommend setting up Repeating Bills for fixed costs like wages, VAT, or insurance—even if they’re not paid via Xero. These won’t be paid automatically, but they help reflect upcoming obligations in your forecast.
đź’¸ Step 3: Forecasting Payments
Once future invoices and bills are in place, Connectorly forecasts when payments will occur and creates FORECAST Payment records. The date is determined as:
- Planned Payment Date from Xero
If the invoice or bill has a “planned payment date” in Xero, Connectorly uses it.
- Calculated Forecast Payment Date
If no date is provided, Connectorly calculates the Expected Payment Date for each Invoice or Bill – using contact-specific payment behaviour. This date is calculated as follows:
- The default is based on the average days to pay (all time) for each contact.
- If the contact has no payment history, a default of 30 days is applied.
- For payables, Connectorly assumes payments occur on the due date.
Connectorly also handles edge cases:
- If the planned or calculated date is in the past, it is pushed forward to reflect a realistic (worst-case) future date.
- Late payers are assumed to remain late, creating a more conservative forecast.
- Bills are assumed to be paid the next day, if overdue, to reflect a realistic worst-case scenario.
🏦 Step 4: Forecasting Bank Transactions
With FORECAST Payments calculated, Connectorly then generates forecast Bank Transactions—these represent expected cash movements in and out of your bank accounts.
Bank allocation is determined by:
- Currency of the transaction (e.g. EUR, GBP, USD)
- Historical bank account usage (typically the oldest account set up for each currency)
This allows you to create a complete forward-looking view of your cash flow, based on realistic timing and account logic by simply using FORECAST Bank Transactions.
âś… Summary
Connectorly’s forecasting model is tightly integrated with Xero, using:
- Repeating invoices/bills as the base
- Intelligent payment date estimation
- Logical future bank movements
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This structure ensures that your cash flow forecasts in Power BI are both data-driven and dynamically updated.
