Financial modelling – crucial to helping your business in good times and bad

Has your business seen extreme changes in demand and performance over the last 18 months? Are your finance team and business forecasting methods helping the business make the right strategic decisions? Most businesses that we work with have had to manage unprecedented levels of change and are having to rethink how they forecast and plan for the future.

The government has ended support schemes such as the Coronavirus Job Retention Scheme (CJRS) and the loans taken out by businesses will need to be repaid. Reliable and robust forecasting has always been important, but for businesses that have relied on the various Government support and loan schemes the importance has never been more critical. Below are just some of the factors that may impact on your cash flow and business performance;

  • Changing demand and trends resulting from the pandemic;
  • End of the Coronavirus Job Retention Scheme (CJRS)
  • Increased debt and associated repayments – from Coronavirus Business Interruption Loan Scheme (CBILS) or other loans
  • Repayment of VAT deferred during the pandemic
  • Increased cost base due to supplier price increases and the impact of Brexit
  • Impact of staff shortages on production.

How will a robust financial model help you?

A good financial model will enhance your understanding of the key operational dynamics of your business and help you assess the impact of key growth areas and risks. It also gives you the ability to assess the pros and cons of particular strategic changes and decisions, for instance when deciding how to manage the end of the CJRS or how to repay government loans. In short, it will help you make the right strategic decisions.

The outputs of a well-constructed financial model also makes Senior Management /Board Meeting preparation more straightforward and highlights pinch points in the coming months and years – mainly around profitability, cash and working capital, as well as covenant testing. This can be critical when having discussions with key stakeholders such as lenders, who will take a great deal of comfort from reviewing a well-constructed set of forecasts when considering any request to borrow additional funds.


Designing the right financial model for you

Our dedicated team has a wealth of experience and expertise in financial model building. We have an established methodology we rely on in the scope and design stages. This delivers financial models that are easy to navigate, flexible and tailored to your specific needs, ensuring you have a readily understood model that will meet your business requirements with the right level of detail and complexity.

If you are wondering how your business could benefit from a financial model or if you are not confident in the accuracy and flexibility of your current forecasting systems, we will happily discuss your requirements and your overall business to figure out how we can improve your forecasting and reporting and ultimately your business performance. Contact Pamela Gillies.

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