Posted: 24 June 2020

Predictive Accounting Identifies When Funding Is Required!

Accountant's Minute 237

Welcome!

Preparing Budgets and Cashflow Forecasts early will identify when additional funding is required.

This is a very important consideration as we are about to commence a new financial year – with many more challenges and dangers for businesses that have not taken some time out to plan and think about the funding of their businesses – these will be some of the problems that confront accountants in 2020/21.

In this week’s "COVID-19 Survival Panel" webinar, Paul Barnaby, Prescriptive Accountant and the Australasian Representative for PlanGuru, will outline the necessity for accountants to be closely involved with their SME clients in the preparation of three-way financial forecasts for the next 3 years to give an insight to the funding that the business is going to require to fulfil the expectations that are contained within the organisation’s Business Plan.

The Budget represents the financial interpretation of the Business Plan, whilst the Cashflow Forecasts enable the Budget to be reflected within the financing realities that the business will encounter e.g. debtors' days outstanding, creditors' payment terms, inventory investment, stock turn, capital expenditure envisaged within the Business Plan, bank loans and overdraft facilities, all of which have a significant impact on the Cashflow Forecast.

The Cashflow Forecast will then reveal whether the business is going to have sufficient funding from its own resources to be able to operate at the level that the leadership team have forecast, or whether it would be advisable for the business to implement strategies to raise capital either under Section 708 of the Corporations Act or Crowd Sourced Funding Equity Raising.

Arthur Ackers, Operations Manager of Equitise, an Australian and New Zealand Crowd Sourced Funding Intermediary, is the other keynote speaker on Friday 26th June. Arthur will give an overview of the history of Crowd Sourced Funding Equity Raising in Australia and, in particular, comment on Equitise’s experience in the Australian and New Zealand markets, including comments on:

The initial review that is undertaken by the Equitise team is to familiarise themselves with the company’s business operations, including assessing the team, traction to date, the market, the company’s business model and technology.

The Equitise team will be keen to review the company’s 'pitch deck' to get a better appreciation of the strategy that the directors and leadership team have set.

Under the Corporations Act, Equitise, as an Australian Security & Investments Commission appointed Crowd Sourced Funding Intermediary is required to undertake a due diligence review on the company to satisfy themselves with the Australian Corporate Regulatory requirements, as well as reviewing market research, verifying contracts and assessing legal agreements.

Once these processes are completed, the next step is to let the crowd decide. These are the people who could actually be investing in the company. Most Intermediaries then like to conduct an 'expression of interest campaign' which allows people from the company’s network and Equitise's network to register their interest in the offer. This requires the company to market the offer, driving traffic to a landing page which Equitise will establish on the Equitise website. The benefit of the 'expression of interest' campaign is that it gives the company and Equitise a strong indication of whether there will be enough backing by the crowd for a successful equity crowdfunding.

This is the start of the Crowd Sourced Funding Equity Raising journey for company directors and members of the leadership team. More and more accountancy firms around Australia are expected to become involved in the Crowd Sourced Funding Equity Raising process during 2020/21 and future years as more small business and medium-sized enterprise directors and operators become aware of the legal processes that are available which enable private companies to be able to raise capital direct from the public.

Accounting firms wanting to offer a broader range of 'Business Advisory Services' need to have a sound knowledge of all aspects of the processes that contribute to a company being able to raise capital direct from the public without having to list on a Stock Exchange, as this process will become more and more part of the accepted business practices in Australia over the next couple of years.

You can register for the "COVID-19 Survival Panel" webinar to be held on Friday, 26 June 2020 by clicking here.

Last week Ashley Evans, Managing Director, AAA+ Financial Services, gave an overview on the various types of borrowings that businesses could enter into to raise money for their business, including bank loans, debtors' finance, export finance and inventory finance.

Peter Towers, Managing Director, ESS BIZTOOLS, presentation “Now is the Time for Business Advisory Services to Assist your Clients to Meet Post COVID-19 Challenges".

You can view last week’s webinar recording by clicking here.

Want to know more about the presentations that were made in last week’s webinar? If so, please click on to “Want to Know More” where you can view the PowerPoint slides that we utilised by Ashley Evans and Peter Towers.

Want to know more about the services that are available from ESS BIZTOOLS and our Affiliates to assist you to proactively assist your SME clients on a wide range of business improvement services which you could offer to your clients? If so, I invite you to visit the ESS BIZTOOLS' website è Survival In Difficult Times è Learn More, where you'll be able to view an overview of the material included in the product packages that incorporates COVID-19 packages.

A reminder… ESS BIZTOOLS and our Affiliates are presenting this special webinar series “COVID-19 Survival Panel” each Friday at 12-noon AEST until 30th September 2020. If you'd like to register for upcoming webinars (click here). If you'd like to view the recordings for the past nine webinars - (click here).

If you'd like to have discussions relative to the products and services that ESS BIZTOOLS can provide, please contact us: