Best Practice Financial Modelling

A financial reporting challenge for your start-up company

Your Company is nascent with choppy cash flow and needs to streamline its accounting systems. There may only be a CEO, CFO and a part-time employee to perform basic accounting duties. Hence the ability to undertake proper financial modelling and analysis appears to be a stretch. Further, without a source of historical and actual financial information, it will be extremely hard for your Company to undertake proper strategic planning and forecasting.

A forecasting regime can greatly assist your Company to properly plan its financial future. The following financial model contains such a dedicated forecasting feature, which can enable your Company to seamlessly forecast out it’s income statements, balance sheet and cash flow into the future.

Making steps to overcome your Company’s financial reporting vacuum

You need to brainstorm the elements to forecast a basic financial statement; your Company’s revenue streams, operating expenses, cost of labour and capital expenditure. At first keep it relatively simple and high-level. If your Company’s reporting needs are more thorough, then you can easily increase the detail of your financial reporting i.e. wage cost breakdown.

Although a monthly reporting regime may sound onerous and time-consuming, it will become more seamless after a few months. The great benefit of this is the ability to spend more time undertaking more value-adding financial analysis and commentary of applicable financial drivers to your Company’s business; rather than number crunching of historical financial numbers.

 

 

 

 

The end solution – a financial model.

A thorough and best-practice financial model will allow your start-up Company to remedy its financial and strategic planning reporting challenges. A financial model will become your Company’s financial repository that management will base strategic planning and forecasting upon. The additional functionality of scenario modelling and sensitivity analysis into your Company’s financial model, will allow management to better measure the financial impact of asset purchases/divestures and changes in interest rates or foreign exchange rates for example.