Class 3: Advanced Forecasting & Getting Client Buy-in Presenter: Christian Wielage
PGU Class 3 Class 3 will first cover advanced forecasting technics. After that we will discuss “Getting your Clients to buy- in” and techniques for selling these services. A. Advanced Forecasting Technics 1. Deferred Revenue (Timing Concepts) 2. Allocations (Excel Loop) 3. Balance Sheet at consolidated level 4. VAT (Value Added Tax) B. Client Buy-in 2
Housekeeping • Your case studies have been approved unless you received an email indicating otherwise. • If you submitted all the case studies you will receive a notification of you graduation by next week. Diploma and Digital Icon will be send out this month • Those of you who have not submitted you case studies yet, you have an unlimited amount of time to submit the case studies, but we recommend that you get cracking so that we can certify you ASAP. • The next session of PGU starts on October 21st. 3
Financial Professionals: Collaborating Around PlanGuru Most of your clients will only know PlanGuru through “PlanGuru Analytics”, others will need the core PlanGuru Software to facilitate effective collaboration. Client does not need core PlanGuru tool For most of our PlanGuru CPA firms, very few of their clients own the PlanGuru application. Because PlanGuru makes the highly difficult, non-value-add work, of “budget building” much easier, there is common a fear that if the client learns about PlanGuru they will just buy it and cut you out of the picture. To avoid this you want to set the proper mindset upfront. Your value to them is not as a financial modeler, it is as a trusted business partner who: 1) already knows the cleint’s business very well and 2) has gained great insight into the budgeting/ forecasting/ planning by working with a broad spectrum of clients. It is about the process of having an outsider shine a critical light, in a systematic way, on a regular basis. Client does need core PlanGuru tool For some larger businesses, where there are multiple key decisions makers, you may need enable them with PlanGuru and act as the “Plan Manager”. You will design the process, do the core set -up and leave the downstream users with nothing but “refinement” responsibilities. You will do the ongoing analysis and serve as Part -time CFO. PlanGuru Launch partnerships are available if you are fearful of biting off more than you can chew. http://www.planguru.com/products/launch/ 4
The US Budgeting Crisis Very few small businesses have a meaningful budgeting, forecasting and performance review process. Without relevant experience they: • Struggle with the technical aspects of preparing this work • More frequently they fail to see the value and do not try Very few accounting firms/ bookkeepers generate revenue from providing these services to their clients Cannot reconcile the cost of delivering these services with what the client is willing to pay. This can change! Huge untapped-reservoir of opportunity for these services
What are OCS? 2) Strategic Planning 1) Operating Budget/Forecast Defines the vision for the future, provides the Organizations construct their budget at the budget with high level targets. Assess risks and beginning of the year and perform ongoing opportunities, yielding better strategic decisions performance review. Rolling cash forecast and contingency plans. process. Performance Review w/ Sensitivity/Scenario Analysis Budget vs. Actual Comparison Break-even Rolling Forecast Business Valuation 3) External Estimate 4) Big Decision Analysis Many organizations make large investments, When organizations need to demonstrate their acquisitions, or bid on large contracts. These estimated financial future to: decisions need to be evaluated in an organized and effective way. Lenders Investors Quickly build intelligent financial projections Business Partners Board of Directors
The Repeating Cycle of Success Jan Strategic Planning Process: Dec Typically performed in the middle Feb of the fiscal year. Sets the direction for future. Nov Mar Budgeting Process: In accordance with the high level parameters set in the strategic plan Oct April Performance Review: Continuously reviewing performance generally and against budgeted/ forecasted targets Sept May Rolling Forecast: Accurate and June tactical view of where the Aug business is headed. July
Ways to offer OCS Mid-Large Engagements Light Review Situations with multiple departments, locations, Less than one day: creating the analysis, subsidiaries, cost centers, etc. Multiple decision choosing forecasting methods and setting makers might be involved in the budget setting assumptions at the beginning of the year. Spend process. In these situations you may spend between 20 mins to 2 hours on preparing the weeks or months on the target setting process. monthly review and formulating pre-meeting Sometimes having a team member working on a conclusions and questions. Meetings are 30 client for a couple days at a time. Each month, mins to 2 hours. Maybe you simply prepare and taking the time to prepare and review all of the upload the data, make a few comments and tell data with all team members might take a couple the client their numbers are available for review; days, culminating in 1 or more big monthly you don’t have a meeting. meetings. Teaching, Training & Support For your clients that have in-house employees Small Business Standard Review capable of managing this process you may just Spend between 1 to 4 days to choose forecasting want to provide implementation and training methods and set assumptions for the budget at process. The PG team can help. the beginning of the year. Spend between 1 to 8 hours on preparing the month review and Flexibility formulating pre-meeting conclusions and None of these are cut and dry. For example, a questions. 1-3 hour review with client. company without cash concerns may only do a rolling forecast every quarter, less maintenance.
Be your client’s Outsourced Finance Department Think small: It is your small business clients that serve as the best marketplace for this service. US Firms by Rev 2.4 MM • The complexity of their business does not warrant a true CFO, but the core exercises that a CFO does are still needed. 1,000,000 800,000 Smaller means easier. 600,000 • Huge market, millions of small businesses are not doing any 400,000 200,000 budgeting and performance review The smaller they get, the 0 more that exist. • See tremendous benefit because they are so deficient. There is opportunity in the “Large” Small Business area. Get a huge leg up in the client acquisition process. • Pitching a low-cost Outsource CFO service will be a key differentiator when businesses are interviewing multiple CPA firms. • Keep your clients while they pay more. The accounting industry is changing rapidly, firms that do not respond will not succeed.
Not a “chicken or the egg” dilemma
Presentation for Clients Help your clients understand all the benefits of hiring you to be their outsourced CFO Juxtaposed “the new you” versus the “delinquent small business masses” Show them concrete examples alongside this PowerPoint
Budget, Forecast & Plan for More Profit [INSERT NAME OF Advisor] [INSERT NAME OF FIRM] Prepared for: [INSERT NAME OF CLIENT] [INSERT FIRM ICON/LOGO]
[INSERT OF FINANCIAL PROFESSIONAL’S FIRM INFORMATION] [THIS CAN BE MULTIPLE SLIDES DEPENDING ON PREFERENCE]
Insert Your Company Header Budget, Forecast & Plan for More Profit Flying blind: Simply reviewing historical financial statements is not enough! • Taking the time to build budgets, do performance review and re-forecast the future drives better decisions. • All important decisions should be made in the context of a budgeting/forecasting meeting weighting out the pros and cons in a systematic way with real data Successful Large Organizations make important decisions in the context of a budgeting, forecasting and planning process. Many large companies have hundreds or thousands of people directly involved in provide management with the projections. Accounting Department > Finance Department > Decisions Makers Operate like the big companies: We can help your team implement these time tested methods by providing our technical expertise and experience.
Insert Your Company Header Budget, Forecast & Plan for More Profit We will be your Outsourced Finance Department At [INSERT FIRM NAME] we are experts in building budgets and plans, let us do the heavy lifting for you. • This will enable you to exclusively focus your time on the value adding discussions and thoughts, not complicated model-building. • Because we are so much more proficient than the other firms, we can deliver this service at a price-point that our competition simply cannot achieve. We will facilitate and optimize the performance review process to focus on what is most important. • Drive the necessary discussions, ask the important questions. • Simply show up to the meeting and we will have the analysis ready for discussion.. Our experience with a diverse group of clients gives us a unique and insightful perspective that an exclusively in-house team would not have. • Share best practices in respect to optimizing your budget and financial review process. • Develop actionable conclusions like specific cost/expense saving recommendations.
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