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Overview
The Add Liabilities feature in Cashflow 2.0 enables you to model liabilities directly within a financial scenario. Liabilities are automatically populated from the Liabilities Section of the client’s Fact Find, ensuring the client’s existing financial commitments are reflected in the scenario.
Additionally, you have the flexibility to manually add new liabilities for modelling, allowing for the inclusion of recommendations or hypothetical scenarios.
⚠️It’s important to note that liabilities added manually from the Cashflow section are considered recommendations and do not flow back to the Fact Find area.
This distinction ensures that any hypothetical or recommended liabilities are isolated within the scenario, allowing you to project and test outcomes without altering the client’s existing Fact Find data. This approach supports accurate modelling while maintaining the integrity of the original client records.
Access
To access the Cashflow 2.0 Liabilities tab, open a client record, hover over the Cashflow tab, and select Cashflow 2.0 from the drop-down menu.
Open an existing Scenario or create a new one by selecting the blue Plus+ button, entering a Scenario Name, and ticking the available setup options.
The Cashflow 2.0 landing page will open on the Cash Accounts tab, Select the Liabilities Tab which is the third tab in the sequence of available options.
The Liabilities tab sits in the Overall Position, and within each individual entity as well.
The Overall Position provides a unified system for managing cash flow for both the Client and Partner.
By consolidating income, expenses, and transactions into a single sheet, it simplifies tracking for multiple income streams and superannuation. This approach allows for efficient management of surpluses and deficits while supporting shared financial goals.
The centralised system enhances your modelling by making monitoring, analysing, and optimising cash management easier.
You can view individual values for the Client, Partner, SMSF, or any Business or Trust entities, and their Superannuation Accounts by selecting these options from the drop-down menu.
📌Note
If the client is unpartnered all the options will be available from the main sheet, and additional entities such as Trusts or Businesses will be found within the dropdown
This allows you to isolate and analyse specific financial data for each entity, ensuring a clear and detailed understanding of their contributions and cashflow dynamics.
Liabilities Source
The Liabilities Tab in Cashflow 2.0 retrieves data directly from the Liabilities Section of AdviserLogic. To ensure accurate modelling and reliable projections, it is essential to verify that all relevant fields in the Liabilities Section are entered correctly and completely. Accurate data entry, including loan details, interest rates, terms, and repayment structures, ensures the calculations and outputs in Cashflow 2.0 align with real-world scenarios.
Completeness of Data
Ensure that all relevant fields in the Additional Details section of Fact Find & Liabilities are filled out with as much information as possible. This ensures accurate calculations and projections in the Cashflow module.
Adding Liabilities
The Add Liability window includes the following fields for precise modelling:
Amount | Enter the repayment amount for the liability. This will be used to calculate the repayment schedule. |
Type | Specify the liability type, such as:
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Owner | Assign the liability to the appropriate owner:
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Liability Structure | Define the structure of the liability:
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Start From | Specify the start date for the liability. Note The liability start date cannot precede the scenario date; it must be on or after the scenario start date. |
Interest Rate | Enter the interest rate for accurate repayment calculations. |
Term |
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Tax Deductibility |
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Offset Age Pension |
Enable this toggle to include the liability in Centrelink Age Pension calculations. |
Credit Limit |
Note If the credit limit field is left blank, drawdowns for the liability will not work. |
Existing | Enable this toggle to add an existing liability that is not included in the Fact Find area. Key difference:
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Description | The description will be automatically populated based on the liability type, but it can be customised to suit specific needs or scenarios. |
Liability Structures in Cashflow 2.0
Liabilities can be entered into Cashflow using three distinct structures, which align with those available within the Liabilities Section of AdviserLogic. These structures allow for flexibility in modelling and accurately reflecting real-world loan repayment scenarios:
Interest Only | In this structure, payments cover only the interest portion of the loan, leaving the principal amount unchanged. This approach is commonly used for short-term or investment-focused loans, where minimising cash outflows in the short term is a priority.
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Principal and Interest | This structure combines payments towards both the principal balance and the interest. Over time, the loan balance decreases as regular repayments are applied to reduce the principal.
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Interest Only + Principal and Interest | This hybrid structure begins with an interest-only phase, followed by a transition to principal-and-interest repayments. It is often used for loans where the borrower requires flexibility in the initial phase but intends to repay the principal over time.
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Data Accuracy
Double-check the Interest Rate, Loan Term, and Liability Structure details to avoid errors in repayment and redraw calculations.
Calculations
The calculations for each liability are based on:
Liability Structure
Interest Rate
Loan Term Period
To edit these parameters, right-click on the existing liability and select Edit.
Change the values required and Save.
📌Note
The available values within the Liabilities Tab are dependent on the selected Liability Structure. If certain fields are greyed out or unavailable, you can try the following steps to resolve the issue:
Change the Liability Structure: Temporarily switch to a different Liability Structure and then revert to the original. This can often refresh the fields and make the values editable.
Update in the Main Liabilities Section: If the issue persists, it is best to make the necessary changes directly in the Liabilities Section of AdviserLogic. Once updated, these changes will then need to be pulled into the Cashflow scenario by selecting Edit Cashflow from the option in the dropdown menu at the top right of the window, ticking the Fact Find Data box and Saving.
Liabilities Tab Functions
Additional Repayments
You can add additional repayments to a loan by right-clicking on the liability and selecting the Additional Repayment option.
Select Create New from the Additional Repayments window.
Enter the Amount of the repayments and the Growth Rate. Specify an amount and period for a one-time payment or schedule additional repayments across different periods, specify the start and end dates, and Save.
The repayment amount for any liability is reflected as an Outflow in the Cash Account tab.
Redraw (Drawdown)
To enter a drawdown (redraw) from a liability, right-click on the liability and select Redraw.
Select Create New From the Redraw window.
Enter the Redraw Amount and the Growth Rate. Specify an amount and period for a one-time redraw or schedule additional redraws across different periods, specify the start and end dates, and Save.
⚠️Important Note⚠️
The Redraw option in the Liabilities Tab requires the Credit Limit field to be completed. This can be done in two ways:
*In the Liabilities Section: Navigate to the Liabilities Section of AdviserLogic and fill in the Credit Limit field.
Directly in Cashflow: Right-click on the liability in the Liabilities Tab, select Edit, and update the Credit Limit field.
*Pulling Changes into Cashflow
After updating the Credit Limit field, the changes must be synchronised with the Cashflow scenario. To do this:
Select Edit Cashflow from the dropdown menu at the top-right of the Cashflow window.
Tick the Fact Find Data box to ensure the updated details are included.
Click Save to apply the changes to the Cashflow scenario.
This ensures that the Redraw functionality is enabled and reflects the updated credit limit accurately within the Cashflow projections.
Recommending Liabilities
New liabilities can be recommended directly from the Cashflow section by selecting the blue Plus+ button on the Liabilities Tab.
You can also use the Add button on the top right of the window, regardless of which tab you happen to be working in.
Enter the requisite fields to create the new Liability and Save.
When a new liability is added, it will show in the Liabilities section.
Follow the Add Repayment Instructions to add repayments for the loan.
The Loan Amount also shows as an Inflow in the Cash Account sheet.
Offset for Age Pension
If a liability should be considered in Age Pension calculations, right-click on the liability, select Edit, and enable the toggle for Offset Age Pension.
Use the Existing Toggle to remove t
Points for Consideration
The Liabilities Tab in Cashflow 2.0 empowers users with advanced functionality to manage loans efficiently, add repayment strategies, and project future cashflows. By leveraging these tools, financial plans can be tailored to meet specific client needs, ensuring precision and flexibility.