1.- PRESENTATION: During the course of the last 25 years I have invented and developed a business analysis instrument with an electronic sheet made in:
"Triple Game", which by:
- its flexibility, the orderly source of information -the forecasting capacity I retain that it is a necessary complement so that the Administrators and / or the owners of Small and Medium Enterprises (PME) can make decisions and thus minimize the risk and maximize the result of the society.
I have developed the root of the project on the basis of the experience of more than 100 companies with the professional contribution of entrepreneurs and administrators.
2. -WHAT TYPE OF COMPANY ARE YOU ADDRESSING?
To all the small and medium Spanish companies that use an accounting based on the “Double entry”. and they want to have a clear vision of the situation of the company, both final and foresight;
It is an instrument that can be used either by the company for management control, or by the certification and control companies.
3. - DESCRIPTION
The electronic sheet is divided into 20 columns that serve respectively:
The first 4 to the general accounting codes, Ledger, Account, Subaccount, Detail
- The 5th column is used for the description of the account that is being used The 6th column is used as a hook for the accounting situation of the previous year Columns from 7 to 18 are used for monthly, bimonthly, quarterly or quarterly according to what you want to do; a budget or an annual budget control, or a Medium Term Plan (ie 12 quarterly data equals 3 years) The 19th column is reserved for the final balance referred to the selected date The 20th column provides the results of the final period.
3.1-What is it for?
For companies that exist to:
- Carry out an annual Business Plan, on a monthly basis; Control the monthly budget with the forecasts in compliance and with the final balances
provided by the general accounting; Simulate the situation of the company (Equity Status, Cash Flow, Sources-Jobs) varying the
payment times of suppliers and clients; Make strategic decisions several months in advance regarding the end of the solar / fiscal year; Check that the general accounting has correctly registered all the
competition expenses of the different months of the year (Work settlement, leasing fees, accrued income,
passive interest, etc.) Have then, at each monthly accounting close, a managerial economic result of the company that is
close to reality and not to an accounting result;
(How many times have I attended companies' results in November in profit that after the end of the year
3.1-What is it for?
For companies in the projection phase:
- To support the management of the company in assessing the risks related to a
new industrial initiative To have a documented support of the financial needs in the medium and long term To have a "Borderaux" of information that allow you to make weighted decisions with elements
Goals in hand and not with optimistic feelings that can later translate into a
business disaster To have a document that is also in common use, either before the Banks or before the financial institutes
(European Economic Community, Regions; European Bank of Investments etc..)
3.2 Is it difficult to use?
A person of average culture, that is, who normally uses the computer, at most in a week is able to use the program.
3.3 Can it be customized?
Yes. Rather, it must be absolutely personalized to the accounting voices, be it as greater than as account, subaccount and description, which the existing general accounting normally uses, so that the same business terminology is maintained and is used as a monthly control instrument.
3.4 How is it done?
The processes are carried out in "Triple entry" in the sense that all company events are linked to each other in "Double entry" also extended to financial flows, in addition to the Economic Account and the Equity Statement.
The Business plan is self-quadrant for definition on Banks.
4.-HOW IT IS USED
It is used “as-as-seen”, in the sense that only economic information is entered, the immobilisations are material rather than immaterial, and in the input tables the conditions to the contour (Credit openings, Discount lines, Rate of Interest liabilities and assets, Distribution of credits on various discount lines, Payment times Clients, Suppliers, amortization coefficients).
At the end, the program supplies the information illustrated in the following point.
Naturally, once the economic and patrimonial information have been introduced, when changing from the conditions to the contour (rates, payment conditions, etc.), it becomes almost a game to simulate the alternative scenarios to that base, and save the various simulations.
5.-WHAT IT SUPPLIES
The Proportional Profit and Loss Account.
The Equity Status The monthly
VAT on credit and debit
The evaluation of the business rating (Basel 2)
The analysis of the sources of financing and the jobs
The Cash Flow generated by the events of the current year
The Cash Flow generated by the events of the previous years
The total cash flow
The characteristic business parameters
The total of the necessary bank discount lines
The total of the necessary bank credit openings
The provision of passive / active interest from bank overdrafts
EXAMPLE
A very simple example is that of a company that already exists for 1 year plus the current year and that wants to control the Budget.
PREVIOUS YEAR DATA INTRODUCTION
We now show a concrete example, also with few company variables, in order to highlight all the interrelationships that are created when the information that is necessary to carry out a Budget and consequently a Budget control or alternatively a Business begins to be inserted. Business plan.
Suppose to be at the beginning of a financial year and to manage, as owner or manager, a small or medium company that the previous year has closed the balance in the following way:
Final Balance Year 2007 Share
Capital € 90,000
Profit € 10,000
Debts against premium suppliers € 20,000
Total Liabilities € 120,000
Cash € 500
Banks € 14,500
Credits against clients Spain € 75,000
Final stocks of raw materials € 30,000
Total Activity € 120,000
This is naturally a simplified way of seeing a balance, but it is very useful to understand how the program treats each value that participates in the budget or business plan of the company.
Forecast Year 2008
Simpre for simplicity, we will use only one item of expenditure and income congruent with the state of assets of the previous year
Clients Spain
Where the first three months are to the final balance, that is, they are to the final balance of the
general accounting of the company.
General input data of the company
Opening of credit
Discount line
Interest rates for assets and liabilities
Payment time for clients, suppliers
VAT rates
Amortization coefficients.
Input data of the current year economic forecast:
Production
expenses Expenses of products sold
Direct and indirect production personnel expenses
Leasing
expenses Sales personnel
expenses Advertising and promotion
expenses Personnel and general services expenses
Data of input last year's equity balance
Activity
Cash, banks
Clients
Ending stocks semi-finished raw materials and finished products;
Property, plant and equipment and relative sinking fund
Intangible assets and relative sinking fund Sundry
loans
IV ° BLOCCO-
Input data for the final balance sheet of the previous year
Passivity
Cash, banks
Medium and long-term financing
Suppliers of raw materials
Suppliers of sales expenses
Suppliers of leasing
Suppliers of sales
services Suppliers of advertising and promotion
services
Suppliers of general services Suppliers of tangible fixed assets
Suppliers of intangible assets
Other debts
V ° BLOCK
Results
Statement of Profits and Losses
Characteristic business control
parameters Equity Status
Bank Rating (Basel 2)
Sources and Investments
Cash Flow
Calculations of the company's active / passive interests
Practical development of the Example
The first thing to do is to enter the patrimonial data of the previous year. To do this we go to the sheet that we show right away, which is that of the Analytical Index and we click on the switch of “pag.
36 "which corresponds to the word" other debts from the previous year. "
After having clicked on the switch of “pag. 36 "The overview of the following page will appear and then we can enter the values of the previous year of:
Capital Stock € 90,000 and Earnings € 10,000 in correspondence of the first column" Asset Status December 31, 2007 "
Also reminding us to enter the ledger and the corresponding General Accounting account (In our case 111.1 and 111.7) with the relative descriptions of the accounts.
We wish to point out that it is of the utmost importance to always have a correspondence between General Accounting and management control.
We now click on the "Start" switch located at the bottom and also at the top left and the program takes us to the overview of the "Analytical Index"
Where we are going to look for the voice Suppliers of raw materials, which is the other voice of the passivity of the Company's Balance Sheet from the previous year.
We then click on the switch for “pag. 29 ”and in an analogous way we enter the data on the debts of the suppliers of the raw materials € 20,000.
We have thus finished introducing the voices of the passive.
In the same way we work on the voices of the asset that is Cash and Banks for 500 and 14,500 Euros by clicking on the switch of the “pag. twenty-one "
In other words, also on the voices Customers Spain and final stocks of raw materials, always reminding us to enter the corresponding accounting codes.
Now it only remains to check that there is the closure between activity and passivity.
To do this, go to the summary table of the company which is the following:
In the event that the data relating to activity and passivity had been wrongly entered, the summary table would have shown a mismatch from the column "Asset Status 31 December 2007" and repetitively for all the following months.
We are now beginning to introduce the expenses for the current year, that is, those for raw materials.
To do this, just go, as usual, click on the "Start" switch, to the Analytical Index page, click on the page switch. 10 which corresponds to the data of Input Raw Materials, Semi-finished and final stocks.
Enter the values of the purchases of raw materials and final stocks for the 12 months of 2007.
Always returning to the analytical index, we click on the switch on page. 7 the following overview will appear that establishes the payment time and the VAT regime of the supplier "Merchandise with purchase of raw materials" that is, 30 days final from the invoice date and VAT at 20%.
The Profit and Loss Account, with regard to production expenditure, with this hypothesis is the following: switch pag. 38
The patrimonial state for the operation of purchase of the raw materials will be: the switch pag. 63
The state of assets naturally takes account of the extinction of the € 20,000 debt of 2007 in 2 installments of € 10,000 each and of the new obligations taken on in 2007.
The cash flow for purchases made from January 2008 onwards will be the following, the disbursements for the Goods delivered to January, start from March (€ 21,123 + VAT at 20% = € 25,348 with payment at the end of 30 days of the invoice date.). The program is automatic and based on the hypothesis of the payment times, it allocates the payments due to the corresponding months.
On the other hand, the cash flow for past debts, that is, those derived from the financial statement of the previous year, was supposed to be paid in installments equal to January and February 2008, as if it were a supply from October and November 2007 always with the same type of payment. The program in this case does not foresee any automaticity on the payments and / or income of the previous years because too much legacy to contingent factors of the past of the life of the company, and then they can be attributed to the months of the following year in a completely independent way..
The VAT, as you can see, given the following overview, is in debt, and monthly the program makes the balance with VAT on credit.
In the case in which the VAT, on the other hand, was on credit, the program would not have planned to charge the following month and the balance would have been taken to credit at the end of the year.
As can be seen from the overview of the cash flow for planned debts for the current year, the payment of VAT on debt is scheduled for the following month. In the case of a company with quarterly VAT, a small modification to the program makes this hypothesis.
We now enter the sales volume forecast for 2008. In the same way as we have already done, we click on the pag switch. 18 and the following overview will appear: We enter the expected values for the volume of sales for the 12 months of the year and simultaneously define the payment conditions and the Customer VAT rate, always clicking on the pag switch. 7.
We will have the following overview where the customer's income is assumed to be 30 days at the end of the month from the invoice date. and VAT at 20%.
The Profit and Loss Account, for the part related to income, is shown immediately and is obtained by clicking on the switch on page. 18 in correspondence to the analytical index.
The Patrimonial State, on the part of the clients, shows as of January 99,560 Euro, which is the sum of the € 41,300 + VAT invoiced in January + I € 75,000 in 2007, deducting the € 25,000 collected in January 2008 that is 41,300+ 8,260 + 75,000-25,000 = € 99,560, and so on for the following months.
Assuming that the € 75,000 of 2007 credits will be collected in equal parts in the first three months of 2008.
The Cash Flow shown below, of the income of the current year, is evidenced with the interrutor of page. 68.
Naturally, the first income related to January 2008 will be charged to February 2008 as soon as the client's payment conditions are 30 days at the end of the month from invoice date. and VAT at 20%.
The following overview shows the BUSINESS BANKING RATING.
While the following shows the situation of the Sources of Financing and Investments.
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