Key Financial Foundations

Key Financial Foundations Presented by Neil Driver

Partner at Davis Grant LLP

www. Davisgrant.co.uk

[email protected]

Twitter @Neil_Driver

020 8477 0000

There are so many

Does size matter!?

Start with the end in mind

E.g. financial forecasts

Key Financial Foundations

www.davisgrant.co.uk 020 8477 0000 [email protected]

Traditional reporting is floored

“Every aircraft in the world today would be grounded if air traffic control relied on the same type of system as companies use today to report their information… current reporting formats provide too little, too late…”

ICAEW New reporting models report - Page 10


Numbers that count …. for your business

LAGGING Indicators

LEADING Indicators

Numbers that count……


Traditional Management Accounts Historic

Lagging Indicators

Will not directly influence your results

One Page Business Plan Forward looking

Leading Indicators

What really counts in your business

If it matters set the number and deal with the gap

Measure your Key Performance Indicators


Our Mission/Vision/Goals We are building the sectors leading company. By the end of 2015 the business will have a 50% market share in the UK and be

value at £25 million pounds

Tech Limited – One Page Plan – November 2012 Key Results Actual Target Comments Value of Business £10.4m £25m We are on track to be worth £25 million by 31/12/2015 Profit £76,235 £67,000 Again, excellent. Thank you everyone. Keep up the great work Cash Generated £36,334 £50,000 We must tighten our credit control procedures up (See Below)

Key Sales Drivers Actual Key Actions Target Click through 25% Great Work, Conversion rate 21% Keep it up ! Number of website 2000 3D Marketing hits 2500 Launch website Average Spend per £1560 Test new cross customer pa £1750 selling system

Key Cost & Actual Key Actions Cash drivers Target Cost £166 Change supplier per unit £150 Negotiation training Payroll costs £276,413 Control overtime £235,000 Debtor days 17 Tighten credit control 15

Key Underlying success drivers Actual Key Actions Target Hours of Innovation 300 Review overall process 350 Customer delight Average customer satisfaction 4.3 Conduct in depth interview with 10 customers feedback scores out of 5 4.5 to identify how to make them even happier Team happiness Weekly “happiness” scores 8.9 Organise bowling evening from timesheet – out of 10 8.5


http://www.davisgrant.co.uk/

Sales forecast needed - based on a number of varied criteria

Large number of variables - almost infinite outcomes.

App price

Quantity

In app purchases

Speed of take up

Represented graphically

Modelling power put firmly in hands of the business

allowed them to find the exact price point for their app to be financially viable and hugely successful.

Understand Revenue and Cash Flow


App Pricing model




Business Structure

VAT compliance

Services / Goods

UK / Europe / Rest of World

Rewarding Key Personnel (EMI)

EIS & SEIS, R&D claim opportunities

Future Patent Box planning

Plan for HMRC visits and protect against the cost

Tax Foundations


Issues: Demonstrate Fair Rewards in an established cash generating

business Complex bonus structure had developed % available above certain profit level dividends for the owners to match bonus for net cash flow after tax

Required Solution:

Flexible model business can control Permutations for rewarding key management with bonus’ and owners

with dividends. Now used as main on-going reference tool Referred to in legal documentation

Reward key people with clarity


Bonus and Dividend Rewards-Remuneration Planner




Planning

Clear Objectives & Goals

Business Structure

Capital

Effective business systems

Take Relevant Professional Advice

Financial Protection Life /Health/Directors Insurance

Efficient Management Information System

Actual To forecast

Timely

Other Key Financial Foundations


Traditional Management Information Reports were Insufficient

Live real time management information – easy visuals

Live actual to budget with drill down

Linked to accounting system

Use other key management data

Bespoke Instant business intelligence : pro-active decision making

Prepared by people who understand the business

Meaningful Management Information – at your fingertips


Financial Dashboard




Bespoke

Advanced

Flexible

Presented as you need

Your problem : our solution

Financial modelling for your numbers that count


Concentrate on core business issues

Not set up with in house accounting expertise

Outsource to Davis Grant Book keeping

VAT compliance

Payroll

Management Accounts

EMI / valuations

Accounts & Tax

Cash Flow forecasts

Financial Modelling

Do what YOU can do…


Plan thoroughly Maximise opportunities Minimise waste Reduce Tax exposure Understand cash flow and cash burn

Measure what’s important (one page plan) Take action to close the gaps between actual

and target numbers Implement effective systems and reporting Maximise your personal time and efforts

Key Financial Foundations


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BLUE BADGE = Davis Grant or a Guest Speaker

Barry Chernoff – Partner

Senior Managers

Technical Team

We look forward to speaking with you soon….


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Understanding where your business is at

Technically aware and sound

Proven solutions

Innovative solutions to unique issues

Flexible

Valuable

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Key Financial Foundations