What is Financial Modelling? -- Business owners have posed this question to me often. While there can be several complicated definitions, simply put, it is the practice of projecting a business’s operating and financial results. Financial modelling allows you to see into the financial future of your business, to plan, and to understand if sufficient cash is available to meet your future operating needs. Is Financial Modelling relevant to me? Every business, large or small, growing or struggling, needs to create robust business plans backed by sound financial forecasts. Successful businesses usually do this better than the ones that are struggling. Or reversing the argument, businesses that create sound financial forecasts are far more likely to succeed over time than the ones that do not. What kind of questions can financial modelling answer? The short answer is – almost all types. Here are some examples: For start-up businesses How much … [Read more...]
Small Firms at Risk Due to Lack of Credit Checking
More than three quarters of UK SMEs have lost money as a result of a customer becoming insolvent, according to new findings published by information services company Experian. The firm surveyed 600 SMEs to understand the impact of customer insolvencies in the supply chain; it found that, in the last five years, 76% of SMEs have lost money as a result of customers failing. Nearly a fifth (19%) of these businesses each lost between £5,000 and £10,000, while 35% lost more than £10,000 over five years. When asked how often credit checks were carried out, 68% of SME owners said they checked their customers’ and suppliers’ credit ratings at least once a year; 24% admitted that they only credit checked new customers, and didn’t carry out ongoing checks; 38% had been running a business for over two years but had only just started carrying out regular checks; and 34% of business owners only started monitoring suppliers after they had already lost money. Ade Potts, managing director of … [Read more...]
