Predictive Accounting Will Help Plan 2021
Accountant's Minute 256
In our last Business Advisory Services Webinars/Conversation for 2020 Peter Towers, Managing Director, ESS BIZTOOLS and Paul Barnaby, Managing Director, Beyond Accounting Technologies and Australasian Representative of PlanGuru, discussed the concept that ‘Predictive Accounting’ will be vital in the planning to help clients in 2021.
The key aim is to “know the financial impact of decisions before a client has implemented those decisions”.
The process commences with an examination of the key drivers relative to the number of units to be produced and requires:
- An estimate of production in the various product categories.
- Estimate of stock holdings in each product category.
- Estimate of cost price dissected into external purchases and labour.
- Estimate of selling price.
- Estimate of stockholding required.
- Estimate of debtors’ days outstanding budgeted by the business.
- Estimate of debtors’ balances.
- Creditors’ terms.
- Budgeted sales volume.
Each of these items will have an effect on the key documents contained within ‘Predictive Accounting’:
- Profit and Loss Forecast Contained within the Budget
- Cashflow Forecast
- Projected Balance Sheet
The key question then is to determine the funding requirement for the business – does the business need to borrow more money? If the business needs to borrow, do they have a suitable asset that can be offered as security or are the directors interested in attempting to raise capital direct from the public as a Crowd Sourced Funding Equity Raising Company which eliminates the need to mortgage an asset and enter into personal guarantees from directors and, in some cases, shareholders and to make monthly repayments of principal and interest.
You can watch the recording of the webinar by clicking here.
During last week we produced a number of short videos relating to ‘Predictive Accounting’. You can watch these recordings if you wish:
- Predictive Accounting Helps – click here.
- Predictive Accounting Encourages Discussion – click here.
- Superstar for Budgeting and Forecasting – click here.
- Key Drivers for Predictive Accounting – click here.
ESS BIZTOOLS has developed a full range of product packages including templates, forms, papers and videos to assist accountants to deliver a full range of Business Advisory Services and Chief Financial Officer Services to clients and prospects.
If you’re interested in obtaining a free, no obligation overview of the Business Advisory Services’ Product Packages, developed by ESS BIZTOOLS, which are suitable for your clients please “Book a Demo” on the ESS BIZTOOLS homepage – https://www.essbiztools.com.au/ or contact Peter Towers:
If you have a friend or colleague who you think might find this article interesting please feel free to pass it on to them.
We look forward to presenting these weekly conversations relative to Business Advisory Services/Chief Financial Officer Services and Government Grants for SMEs from Wednesday, 20th January 2021 at 12-noon AEDT (11.00am AEST). We will send you details of the guest presenter for this webinar early in January.
We’d like to take this opportunity of wishing you a Very Merry Christmas and a Happy, Safe and Successful 2021!
Stay safe!
Have a great day.
