This is a financial table grouping together all the expenses (or “charges”) and receipts (or “products”) related to your project for the current or future year. The year concerned is called “fiscal year”.
Establishing the provisional budget means anticipating all the expenses and income related to your activity over a financial year.
The provisional budget allows the business manager to anticipate his sales objectives, and to quantify the purchases and other expenses which result from them.
The entrepreneur must not: overestimate the turnover; underestimate variable costs; underestimate the fixed costs. It must also assess overheads, financial costs (to finance inventories and accounts receivable);
XII.1. The investment plan
An investment constitutes a long-term immobilization of financial resources; they can be tangible fixed assets (land, construction, production equipment, , works / fittings, vehicles, office furniture, etc.) or intangible (registration fees, lawyers’ fees, notaries, etc.) experts, trademark registration, start-up advertising, internet, business assets, etc.).
The role of amortization is to record the irreversible amortization of an asset, its “consumption”. Amortization is an accounting term that defines the loss in value of a company’s capital asset, due to wear and tear or obsolescence. The depreciation allowance depends on the normal period of use of the asset, set in the General Accounting Plan (between 5 and 10 years depending on the asset, in general.
XII.3. External charges
External charges group together a set of accounts used in accounting to present the details of charges and expenses incurred by a company other than salaries, taxes and costs of sales. External charges are an important item in the income statement. These are the costs that the company exposes to produce and sell, but also to maintain its production apparatus.
XII.4. Cash flow
The cash flow table lists all the cash receipts and disbursements planned during the year, breaking them down month by month. Cash flow is all the mobilized financial resources available to the company at a given time. Cash management is fundamental for any business, regardless of size, status, or industry. It is the available cash that makes it possible to pay the expenses of the company: salaries, suppliers, etc. and save money. In order to validate the relevance of your cash flow forecasts, we also recommend that you regularly compare your forecasts with what has really been achieved.
XII.5. WCR / Cash flow requirement
Working Capital Requirement (WCR) represents the amount of money a business needs to cover its cash flow mismatches between receipts and disbursements (called the operating cycle).
XII.5.1. customer debts
Customer debts represent all amounts owed to the company as a result of the sale of products or services that have not been paid in cash. It is “the money sleeping outside.” Too much debts can hinder the development of the company, and can generate a growth crisis.
XII.5.2. 5 good practices to improve your cash management
Since the cash flow is a very important part of running a business, we have decided to provide you with a list of the main commandments that can help you manage your cash flow better: Projections; cash flow monitoring; charge on time and balance inventory and anticipate problems.
XII.6. Financing plan
A financing plan is a document that presents the financial needs of a business at its beginning then over several years and the financial resources allocated in return.
A balanced financing plan is a guarantee of success. This is why we must identify all the financial resources necessary to finance the establishment costs, the purchase of fixed assets and the working capital requirement which is used to finance the first months of the activity.
1) Financial aspects: the financing plan therefore makes it possible to precisely measure the amount of resources required for the main expenses of the company.
2) Distribution of profits: in the event of a distribution of profits, the latter are shared in proportion to the participation in the capital.
XII.7. The balance sheet
The balance sheet is an image of the company at a certain point in time: at the end of the financial year.
XII.7.1. State of heritage
The balance sheet is part of the tax package that the company must submit to the tax authorities each year. It is a legal obligation. But it is also a management tool that allows the creator of the company to understand the structure and development of his company and to position it in relation to its competitors, in particular through the provisional balance sheet. This balance sheet enables strategic decisions to be made for the future of the company.
XII.8. The income statement
The income statement is an accounting document presenting all of the income and expenses of a company during an accounting year. Like the balance sheet and the appendices, it is part of the financial statements of companies.
The S F C (Self-financing capacity)
It is the self-financing capacity of the company before the distribution of dividends. In the case of a positive S F C, decide whether to use this capacity to finance the expansion of the business or distribute dividends or both.
Profitability is the ratio between an income obtained or expected and the resources used to obtain it. Net financial profitability is equal to the net cash flow.
XII.9. Profitable level
The purpose of calculating the break-even point is to calculate for each year the minimum amount of sales that will cover the costs (variable and fixed) of the business. It makes it possible to measure the risk rate of being in deficit.
XII.10. Development tools
When we talk about development, we often think of the economic development of a business. However, this is a broader subject that also encompasses human resource management and employment, investment in real estate through the acquisition of new premises or production sites, etc.
XII.11. International development
International development requires significant investments and poses new risks to the company. More than a challenge, international development is fast becoming a priority for many companies. Indeed, faced with the sometimes atrocious competition in the countries of origin and faced with the unstable economic context and unpredictable, omnipresent and threatening competition, many internationalization strategies are delayed or even aborted: if growing globalization is no longer reserved only for large groups, it nevertheless remains a source of apprehension for SMEs and mid-cap companies and can lead to many questions. Can we really face competition in other territories / countries? The competitive advantage linked to the economic strategy: concrete financial outcomes International development is a real opportunity for companies, in particular:
– the conquest of new customers but also more broadly, to initiate a profound change in commercial strategy.
– The ability to act to get out of domestic dependence;
– deal effectively with the general saturation of the markets. It is not always easy to stay competitive in the face of too small or stagnant markets.
– Creating new ancillary commercial networks in areas where development is booming is an opportunity to nimbly counter competition, while getting closer to key local partners.