Cash flow visualization is a critical part of financial modeling that can build an accurate picture of your current financial status.
With a current realistic foundation, businesses and accountants can choose to model out a historical perspective – especially useful in sales and certain manufacturing industries; however, the real value is in a present day, easy-to-update ‘living’ scenario that can be extrapolated forward to test strategies and hypothetical scenarios.
What are the Benefits to Financial Modelling?
Here’s our latest short article in our series where we discuss another key term that the Dryrun team often hears in conversations. Not surprising, considering our passion to help business owners and accountants connect through cloud tools, that it totally makes sense that we hear about ‘financial modelling’ from time to time, but when we talk with people outside the team, we’ve realized that it’s a term that has a lot of different meaning to different people. By clearing up the definition, we pave the way to discuss the real issue at hand - the benefits of using software to build a financial model that is effective for your business.
What Makes Financial Models Useful?
As a businessperson or accountant you may think that building a financial model is an exercise in creating unnecessary busywork instead of focusing on core aspects of your business or your sales pipeline, however nothing can be further from the truth. Without a fundamental understanding of your financial ‘vitals signs’, you have difficulty understanding risks and opportunities which hobbles your strategic ability to plan for growth within your organization or within your industry.Modelling allows you to keep a finger on the pulse of your business, including your one-time and repeating payables and receivables, your cash flow as a separate but important process, and your sales pipeline. The real trick here is to find a tool or tools that make data inputs and visualizations easy so that you’re able to fine-tune, update and be briefed on all your key information so that you’re ready to make day-to-day strategic decisions.
Which Business Stages Benefit From Financial Modelling
There is no timeline in place for engaging in such a high value activity as building a model of your finances, although like anything worthwhile, there is both an up-front and ongoing time commitment to build and maintain your model. Each business grows and develops through a number of phases, called the business lifecycle. Tools and software that help you model are valuable at each stage as you adapt your strategy to fuel growth and manage risk.
Entrepreneur lays out the following stages succinctly:
Seed and Development:
With your company at the concept stage, evaluating the viability of your business idea and strategic approach requires an evidence-based approach to what your financials will probably look like. Vet your model with friends, family, mentors and industry personnel to have them poke holes in your plan. Having a visual representation of how you’re going to budget your dollars and cents is extremely helpful in conveying your ideas.
Business Startup:
Launch mistakes can impact a company for years; fully 25% of start ups don't last 5 years. Knowing how and where to spend your capital to fuel careful growth while refining your product is a key concern – avoid pitfalls and check your intuition by making a map of your financials and forecasting into the near- and mid-term future.
Business Growth And Establishment:
With a constant source of income and a full sales pipeline, stay the course of checking in with your financials on the daily. With careful forecasting and management, profit should improve at a steady pace. Establishment sometimes means hiring new staff as the business scales - ensure your financial models also scale to stay useful and not cumbersome. Dial up cash flow by modelling your ideal sales pipeline then working toward those goals.
Expansion:
With a clear industry presence, experiencing growth in revenue and cash flow shows you’ve hit this stage of the business lifecycle. A great financial modelling tool that is easily sharable with your management team will keep you from complacency or carelessness while continuing to maximize growth and revenue.
Maturity and Possible Exit:
With stable profits, business owners should now evaluate the merits of expansion or exit. A robust plan with a fully documented history through the five stages will help point the way for the next round of strategy or increase the value if you choose to sell.Startup Genome indicates that more than 90% of start up businesses fail, often due to foreseeable but ignored circumstances like managing cash flow.
How to Find the Best Financial Modelling Tool for Your Business
Forget spreadsheets. Past the concept stage of your business, you’ll need something with considerably more power under the hood, and the capabilities to display your current and forecasted financials in a clear and impactful way – to say nothing of an easy learning curve.Look for the following features to pinpoint software that will serve your needs, instead of the other way ‘round:
• Top-notch live support and knowledge-base
• Cloud-based, no OS compatibility issues, easy collaboration
• Ability to flexibly enter and toggle data streams like AP/AR, cash flow, budgeting and sales
• Integrations with other popular accounting and sales software
Dryrun: The Ultimate Tool for Effective Financial Modeling
In the complex landscape of business financial management, cash flow visualization stands as a cornerstone, enabling businesses to gain a comprehensive understanding of their current financial status. This foundational insight is crucial, not only for maintaining a snapshot of the present but also for building a dynamic, forward-looking financial strategy.
Dryrun financial forecasting software is uniquely positioned to elevate this process, transforming financial modeling from a cumbersome task into a streamlined, insightful, and strategic exercise.
Why Dryrun Stands Out for Financial Modeling
Versatile Modeling Capabilities: Dryrun goes beyond traditional financial modeling by offering the flexibility to create models based on your specific business needs, whether they're rooted in historical data analysis or aimed at crafting forward-looking projections. Its capacity to easily model 'living' scenarios allows for real-time updates and future strategy testing, making it an invaluable asset for businesses aiming to stay agile in a fast-paced market.
Benefits of Financial Modeling with Dryrun:
- Clarity and Insight: Dryrun demystifies financial data, presenting it in a clear, visual format that makes understanding and decision-making easier for businesses and accountants alike. This clarity is essential for identifying both risks and opportunities, laying the groundwork for informed strategic planning.
- Adaptability Across Business Stages: From seed and development stages to expansion and maturity, Dryrun provides relevant, actionable insights at every phase of the business lifecycle. Its scalability ensures that your financial models grow and adapt alongside your business, providing continuous value regardless of your company's stage of development.
- Integration and Collaboration: As a cloud-based platform, Dryrun facilitates seamless collaboration among team members, integrating effortlessly with other accounting and sales software. This connectivity not only simplifies data management but also enhances the strategic alignment across departments, a critical factor for businesses aiming for holistic growth and stability.
Choosing Dryrun for Your Financial Modeling Needs
When searching for the best financial modeling tool, businesses must look beyond spreadsheets to solutions that offer deep insights, flexibility, and user-friendliness. Dryrun distinguishes itself with features designed specifically for the needs of modern businesses, including:
- Exceptional Support: Access to live support and a comprehensive knowledge base ensures users can maximize the software's capabilities and tailor it to their specific needs.
- Cloud-Based Convenience: With its cloud-based infrastructure, Dryrun eliminates compatibility issues, allowing for easy collaboration and accessibility from anywhere, at any time.
- Comprehensive Data Management: Users can effortlessly input and adjust data streams like accounts payable/receivable, cash flow, budgeting, and sales, making Dryrun a versatile tool for comprehensive financial oversight.
- Seamless Software Integration: Dryrun's ability to integrate with popular accounting and sales software streamlines financial management processes, ensuring that all your tools work together harmoniously.
Dryrun financial forecasting software emerges as a paramount solution for businesses seeking to harness the power of financial modeling for strategic planning and growth. By offering detailed visualizations, flexible scenario planning, and seamless integration, Dryrun empowers businesses to navigate the uncertainties of the market with confidence and precision.
Embrace Dryrun, and transform your approach to financial modeling into a strategic asset for your business.
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Dryrun delivers real-time, dynamic cash flow and revenue forecasts with complete manual control and unlimited scenario modeling.
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