Integrated financial planning – recognizing and modeling business relationships
- Are you afraid of contact with numbers?
- Do you want to understand and actively manage your numbers?
- Do you want to meet your investors, the bank or funding institutions at eye level with reliable forecasts?
- Do you want to understand whether your business will still be profitable in two years?
- Your gut tells you which products will make you money, but you can’t really justify it?
Within the last few years, the relevance for companies to have the exact figures in front of their eyes at all times has increased significantly. This also includes analyzing correlations and recognizing any risks in good time.
Reliable and meaningful financial planning is one of the most important foundations for keeping everything in view and acting accordingly. This includes factors relevant to the balance sheet as well as earnings and liquidity aspects of a company. In summary, integrated financial planning focuses on all aspects that have a long-term impact on the financial situation and liquidity of a company.
Model the future of your business with QRAI Finance team
As an experienced company, we are familiar with the versatile possibilities offered by the instrument of integrated financial planning and enable you to obtain a precise overview of all important processes of your company.
Especially in connection with financing, a professional and transparent presentation of expected sales and earnings as well as the existing and future liquidity and asset situation represent a central basis for decision-making for lenders. This is because it shows, among other things, whether repayment as well as interest can be regarded as secured in the long term.
Last but not least, you can compare different action options. An example of this is the make-or-buy decision (in-house production vs. purchase on the market).
Your advantages through integrated financial planning SUMMARY
You know which projects are financially attractive and can prove it
You can model your prices at the push of a button to match customer needs and your profitability expectations
You understand the (cost) drivers of your business, allowing you to quickly derive the right actions to take
You have full access to all our expertise in finance and grants management
Give us a call. We’ll help you keep an eye on the most important numbers and lead your company into a successful future.
Financial modeling – increase business efficiency with modern controlling tools
Financial modeling is the process of mapping and modeling interdependent complex business relationships. This approach is primarily used to create integrated, future-oriented corporate planning. Derived from this is the reporting and simulation of financing and investment options and the related business transactions in connection with purchase and sales prices.
In this way, it is possible to obtain a transparent overall picture in relation to the company, which is the crucial point that makes integrated corporate and financial planning an indispensable part of corporate management and the planning of future corporate transactions.
Auditing firms and investment banks also use financial models to calculate assets, and simulation and analysis of capitalization options can also be implemented in this way.
A model or financial model is a simplified and idealized assumption of entrepreneurial reality and a quantified representation of the company or various projects. This means that a good financial model goes into detail in the necessary points, but at the same time must be designed in such a simple way that it provides a transparent and quick overview.
Further advantages of detailed financial modeling
Although such a model is based on assumptions and subject to simplification, it offers the possibility to identify developments and trends at an early stage and to set the necessary measures and processes in motion. A model offers the possibility to create different company-related scenarios, to analyze them completely and to adjust to them if necessary. In this way, liquidity and earnings risks are reduced.
Due to a high flexibility of the model, model changes can be made within a relatively short period of time if information changes or additional factors and options are to be considered.
A model created by us also offers you these possibilities as well as the option to make changes independently. We provide you with all the tools you need to understand and, if necessary, update your company’s financial model.
The advantage of a competent implementation of integrated financial planning
The relevance of financial modeling in today’s world cannot be denied. However, in practice, errors often occur that lead to incorrect results and thus have unmanageable negative consequences for the company.
These errors are mostly due to a lack of experience in the creation of such models as well as no or insufficient coordination if more than one person is involved in the implementation. In addition, errors often occur when adjusting and entering data, assumptions or necessary formulas for the calculation.
A structured implementation and technical, structural and logical review of the financial model for incorrect information, weaknesses or inconsistencies can minimize the associated risks. Through a comprehensive review according to the principle: “4 eyes see more than two”, we also analyze and review your previously entered information and provide you with comprehensive, transparent and comprehensibly broken down feedback.
We are experts in the field of integrated financial planning and a competent partner at your side on your way to success.
You are probably wondering how to become an expert in this field when there are no standards and no guidelines. The answer is simple: through practice and the years of experience that go with it. This is exactly what QRAI’s work is based on and our success proves us right.
Do you have further questions about our services in connection with financial modeling and integrated financial planning?
Please contact us. Within the framework of a comprehensive consultation, we will show you your advantages and support you in the implementation of your individual concept.
What makes the design of a financial model so complex
While the insights gained from such a model are fundamentally used to make decisions about important business ventures, they are not subject to any general financial modeling standards or predefined guidelines. This means that the quality of financial models can differ significantly within companies. However, it is important that the model meets the requirements of the business as well as those of any financiers.
To achieve this, there are certain unspecified rules that serve to minimize errors and maximize the efficiency and ease of use of users of these models as well as the acceptance of third parties through.
- The right grouping of documents
Depending on the goal of financial modeling, different documents and records are needed or information from certain categories is grouped together. These should be grouped into raw data, assumptions, analysis and output and, if necessary, identified accordingly.
This procedure is also referred to as Stringent Workbook Design and enables not only an improved overview, but also the modification of corresponding data with little time expenditure. At the same time, however, the financial model itself should be mapped in a file, without links and external sources. In this way, inconsistencies and redundancies can be prevented.
- Complete and comprehensible representation of premises
As already touched upon, such a model is based on assumptions, which means that all associated premises must be collected and sufficiently defined. These must also be clearly presented on the so-called premise sheet. Due to possible links and variables, this is a model cockpit. This serves to control the actual scenario as well as the corresponding sensitivity analyses.
- The basic rule is: “Keep It Smart and Simple”.
Also known as the KISS principle, this term refers to the need to keep a financial model as simple as possible while still accommodating all the important details. It is relevant that the structure is designed in such a way that third parties can also understand it without having to ask questions or first obtain comprehensive information in order to get started. The data flow should correspond to the natural reading behavior in order to ensure the absorption of the necessary information.
The formulas used for calculation should be simple calculation formulas and not complex approaches in order to maintain comprehensibility for third parties without generating unnecessary further effort. The division into intermediate steps can be useful here.
The use of macros should also be well thought out, as it is not always possible to guarantee that third parties will be able to understand them without appropriate Visual Basic experience.
These are only examples that need to be considered when implementing financial modeling. Thus, the complexity does not only result from the fact that a certain intuition and a professional know-how are necessary, but also from the necessity to keep all important factors in mind and to implement them in relation to the company or a certain project.