The owner takes on this function if the company has been opened recently, there are no complex processes, and information on revenue and expenses can be collected manually.
Financial director - if the average monthly philippine country code revenue of the enterprise exceeds three million rubles, the team consists of more than 15 people, and over 700 thousand rubles are spent on salaries per month. All these indicators indicate fairly complex business processes. This means that in order to quickly receive reports and make decisions on further business management based on them, there must be a financial director on staff.
9 stages of anti-crisis financial management
Main types of financial models
The structure of a complete financial model includes three smaller schemes or budgets. This is a document on the flow of funds, which is also called a cash flow statement or cash flow. It also includes a budget of profits and losses, "profit and loss" (P&L). And the third model is the balance sheet of assets and liabilities.
Most often, companies form a cash flow statement , which is designated as a financial model in the narrow sense. This budget is the most understandable, it can be visualized using changes in the accounts and cash desk of the enterprise. It is used to forecast liquidity.
It is important for a businessman to know whether the company will have funds to pay rent, taxes, payments to suppliers, and pay wages in each forecast period. Another important task of this budget is to form the final cash flow for the enterprise. On its basis, key investment performance indicators are calculated in the financial model, namely, IRR and NPV - we will talk about them later.
The second document, the profit and loss budget or accrual budget , is created not on the payment date, but at the time of the emergence or repayment of obligations. Let's say, when selling your product, you ask for an advance or immediately take an annual subscription fee for your service. Then the income will be reflected in the cash flow statement, and in the P&L the income can be recorded only after the client receives the product. If we are talking about a subscription, then 1/12 of the annual payment will be taken into account as revenue each month.
The key differences between cash flow and accruals are explained by the separation of financial flows and rights to them in different periods. For example, you receive an advance for work, access to a service, or wait for money for goods you delivered within 90 days. This situation also occurs in the case of wages: they are calculated for January and paid in February. The same thing happens with taxes, since they are determined and transferred after the expiration of the period for which they are accrued. A similar picture is formed with depreciation, in which fixed assets are paid for immediately, and are partially accepted as expenses, in accordance with the expected service life.
Main types of financial models
All of the above examples, taken into account in the financial model, cause a fairly significant discrepancy between cash flow indicators and accruals. This is especially true for a business that is growing rapidly and selling SaaS on an annual subscription model. P&L allows you to determine how efficiently the company operates, and not just generate cash.
The point is that a company can receive a lot of advances, promise a bonus to sales specialists at the end of the year, and only have to pay taxes next year. It may seem that there is a good cash flow, although the enterprise is unprofitable. Another task of P&L is to plan for income tax.
The difference between the first two types of budget, as well as their final lines, i.e. the cash balance and profit/loss, are transferred to the balance sheet. They affect accounts receivable and accounts payable, the amount of loans that the business takes to cover cash gaps. The balance in the financial model allows you to determine the sustainability of the enterprise in the short and long term, as well as the period of time needed to repay the obligations, and the amount that shareholders will ultimately receive.
A cash flow budget is sufficient for a new firm, provided that its financial model does not have significant deviations between payment terms and product sales, as in the subscription example. Also, there should be no provision for deferring large bonuses to employees.