Primary Predictive Accounting Processes
Business Advisory Services Update
There are 3 primary exercises that fit into the services offered by “Predictive Accounting.”
One: Strategic Planning
It’s an opportunity to get all the key stakeholders together, once a year, where deliberation can take place on where the business will be in 1, 2, 3 years.
Two: Monthly Budgeting
This means a comprehensive set of goals based on the “Strategic Plan” the business hopes to achieve and details of how the targets will be achieved.
It’s not just about setting goals, it’s about assigning accountability. There is normally a marketing manager or production manager that, in their job, they are making decisions that affect the bottom line of the business.
By pulling them into a meeting once a month, measuring their performance, asking them a whole bunch of questions, it changes people’s behaviour on a day-in-day-out basis when they know that you’re going to show up with the owner and ask them all these questions. For example, “Last month you said this would happen, what changed?”
They’re not going to be blindsided by that and they will show up at the meeting with an answer and, hopefully, a solution. By doing this, you are setting targets and holding people accountable.
Three: The “Rolling Forecast”
This is where you say, “Okay, see you later sales manager, you go out and hit that sales budget.” Then when you shut the door, you break out the “Forecast”.
“We’re probably not going to hit that sales budget, are we?”
This is where the budget is “aspirational”. What you hope to achieve is reflected in the “rolling forecast” which is a “little bit sober” and a “little bit pessimistic”, to ensure that, if things don’t work out as per the budget, that you have contingency plans.
This is the type of accounting services that many SMEs require.
