Advisory Services

What is it?

A budget is simply an estimate of income and expenditure for a set period of time. It’s about planning for the future based on what you’ve learned from your past financial story.

Why it matters?

Budgeting is like a roadmap for your finances. It sets clear financial goals, tracks spending, and helps you achieve financial stability. Regular analysis and reporting ensures you stay on track and adapt as circumstances change.

How we do this

• Start with the numbers you have – begin with your profit and loss report from Xero. This is like looking at a snapshot of your business’s money story.
• Set goals for each category – we work with you to set goals for each revenue and expense category for the coming period of time.
• Follow the plan – we use tools or systems to make sure the business is spending money as planned, this keeps things on track
• Adjust for changes – if there are any changes coming up, like new expenses or income changes, we’ll adjust your budget accordingly.
• Reporting- we’ll provide a monthly report showing “actuals” against the budget, highlighting any variances and offering insights and suggestions

What is it?

A cashflow forecast is an estimate of the amount of money expected to flow in and out of your business.

Why it matters?

Cash is the lifeblood of any business. Preparing a cash flow forecast will identify whether your business has enough cash to run, now and in the future. As a result, you will know your cash position and find potential shortfalls in your cash balances in advance. This is valuable information for your business and can allow you to confidently make informed decisions around tax planning, new equipment purchases or growing your staff.

How we do this

• Data analysis – a good portion of a Cashflow forecast is calculated by using a P&L budget. We also analyse your current average creditor and debtor days along with BAS/IAS due dates, wages and super payments, loan due dates and other Balance Sheet liabilities.
• Timings – timing is what differentiates a budget from a cashflow forecast. A budget looks at when accounting transactions will take place but the timing of associated payments and receipts is often different from the budget and affects the cashflow forecast.
• Regular updates and monitoring – cashflow forecasts aren’t a one-time effort. We regularly update and monitor the figures to see how you’re tracking.
• Collaboration and feedback – your insights and feedback are integral to the process so that we can ensure the forecast is built on a holistic understanding of your operations, goals and unique challenges.
• Reporting – each month we’ll provide you with clear, actionable insights such as:

1. Identifying potential cash shortages
2. Optimal timing for investments
3. Highlighting season trends
4. Debt management strategies
5. Supplier negotiations
6. Impact of delayed payments from clients

What is it?

We take a close look at your financial statements (Balance Sheet and Profit and Loss report) and analyse key financial ratios which are crucial to your business’s health.

Why it matters?

This provides a snapshot of your financial standing. The Balance Sheet reflects your assets, liabilities, and equity, while the Profit and Loss Statement shows your revenue, costs, and profitability. Ratios offer insights into liquidity, profitability, and efficiency, aiding informed decision-making.

How we do this

• Review your P&L and Balance Sheet in Xero – these are financial snapshots of your business’s performance.
• Identify key numbers – we pick out important numbers from your P&L, like total revenue, expenses and net profit. From the Balance Sheet we focus on assets, liabilities and equity.
• Calculate profit margin – we use the net profit from your P&L to calculate profit margin. This shows you the percentage of your total sales that you keep as profit.
• Analyse gross and operating margins – we analyse your gross profit margin from the P&L and operating margin to understand how much money you’re making after accounting for costs and expenses.
• Look at liquidity ratios – we check your current assets and current liabilities from the Balance Sheet to calculate liquidity ratios. This shows how easily you can cover short-term expenses.
• Evaluate debt-to-equity ratios – we analyse the relationship between your business’s debt and equity. This shows how much of your business is funded by debt compared to owner investment.
• Examine return on equity (RoE) – we calculate RoE by looking at your net income and owner’s equity from the Balance Sheet. This ratio helps assess how well your business is using owner investments to generate profits.
• Set improvement goals – we’ll work with you to set goals for improvement based on your analysis.
• Regularly monitor and update – we’ll keep a regular eye on these numbers in Xero and report to you monthly.