{"id":4979,"date":"2022-06-09T11:48:07","date_gmt":"2022-06-09T10:48:07","guid":{"rendered":"https:\/\/www.langricks.com\/?p=4979"},"modified":"2022-06-23T15:19:01","modified_gmt":"2022-06-23T14:19:01","slug":"the-benefits-of-financial-modelling","status":"publish","type":"post","link":"https:\/\/dev.withcreative.co.uk\/langricks\/the-benefits-of-financial-modelling\/","title":{"rendered":"The benefits of financial modelling"},"content":{"rendered":"<p><strong>It is easy for businesses to drift from one month to another, with no clear focus on a strategy to drive growth.<\/strong><\/p>\n<p>With the right tools in place, a business can go from drifting to a business that is growing with a clearly articulated strategy.<\/p>\n<hr \/>\n<p><strong>\u00a0A good financial strategy will:<\/strong><\/p>\n<p>Reflect the visions of the management team<\/p>\n<p>Allow the business to set monthly target key performance indicators<\/p>\n<p>Allow management to understand the financial investment required. Such investment can include:<\/p>\n<ul>\n<li>Capital expenditure<\/li>\n<li>Investment in headcount<\/li>\n<li>Investment in infrastructure<\/li>\n<li>Investment in working capital<\/li>\n<\/ul>\n<hr \/>\n<p>However, without robust management accounts in order to be able to track actual performance against your plan, in real time, you may struggle to deliver your growth strategy. \u00a0Understanding variances and acting accordingly is <strong>fundamental<\/strong>.<\/p>\n<hr \/>\n<p>All businesses need the ability to adapt to changes in the landscape in which they operate.<\/p>\n<hr \/>\n<p><strong>Financial models also become important when:<\/strong><\/p>\n<ul>\n<li>Selling a business &#8211; investors like to understand the strategy but also like to understand its ability to forecast or budget effectively<\/li>\n<li>Raising finance &#8211; it is fundamental to make sure that a business can afford any debt taken on and that it has sufficient headroom with the covenants that a lender may set<\/li>\n<\/ul>\n<hr \/>\n<p><strong>In our opinion, a financial model should include:<\/strong><\/p>\n<ul>\n<li>an integrated profit and loss account, balance sheet and cash flow on a monthly basis<\/li>\n<li>clear assumptions that are supported by historical performance\/supportable assumptions<\/li>\n<li>key performance indicators<\/li>\n<li>working capital clearly shown<\/li>\n<li>the ability to sensitise the key assumptions<\/li>\n<\/ul>\n<p>We have a wealth of knowledge and experience in financial modelling, to find out more contact our modelling team or you can read our <a href=\"https:\/\/www.langricks.com\/clients\/case-studies\/nutravet\/\">case study<\/a>.<\/p>\n<p>Find out more about our financial modelling services <a href=\"https:\/\/www.langricks.com\/strategic-services\/financial-modelling\/\">here<\/a><\/p>\n<hr \/>\n<p><a href=\"https:\/\/www.langricks.com\/contact\/\">Get in touch<\/a> for more information for a friendly chat about how we can help<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It is easy for businesses to drift from one month to another, with no clear focus on a strategy to drive growth. With the right tools in place, a business can go from drifting to a business that is growing with a clearly articulated strategy. \u00a0A good financial strategy will: Reflect the visions of the [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1807,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-4979","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog-articles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The benefits of financial modelling - Langricks Chartered Accountants and Business Advisers<\/title>\n<meta name=\"description\" content=\"Information on the benefits of financial modelling and how it can help businesses achieve their goals\" \/>\n<meta name=\"robots\" content=\"index, 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