Each project starts with a Modeling Panel where team members define numeric variables to drive a financial forecast. To create a forecast, start a project, open tab areas and fill in the blanks. Tab areas feature defaults that can be overridden, shortcut modeling functions, drop-down sub-category lists and tooltip information.Your forecast can run for any length of time up to 5 years. You can select a length of financial report term when exporting Chart and Reports. 8 assumption categories act as a checklist to create a forecast. Open tabs in any order to enter and edit variables.
1. Setup: Add or edit general forecasting variables. This section features preset suggestions for variables which can be accepted by leaving suggestions as-is or can be overridden by entering a new variable:
a. Start Date: Your project’s creation date is suggested as a preset forecast start date. You can override this date by entering any date of your choice.
b. Currency: Enter the type of currency that you want your forecast to display. If you work in US dollars, simply leave the default currency as-is.
c. Bank Account Interest Rate: It’s assumed that your project will have an interest-bearing bank account to keep cash reserves and that such account earns interest which is recognized as income in your financial forecast. Enter a custom interest rate or accept the default interest as-is.
d. Opening Cash Balance: Enter any amount of cash, if any, that your project starts with such as funds on account for an on-going project. Alternatively, you can visit the Funding tab to more specifically define cash infusions from equity, loans, grants and donations.
e. Sales on Credit %: If you intend to allow buyers to pay for offerings on credit terms, estimate the overall percentage of sales that will be subject to credit terms. If you don’t allow purchases on credit, simply leave the default as zero.
f. Credit Terms: If you intend to allow buyers to pay on credit, define payment terms by selecting a 30-, 60- or 90-day payment term. If you don’t allow payment on credit, i.e., require buyers to pay immediately, simply leave the default as due “Upon Sale.”
g. Employee Benefits (Annual %): Estimate employee benefits as a percentage of employee salary compensation. You can also simply leave the default percentage. Employee benefits typically include unemployment and workers compensation insurance, health care, dental coverage and retirement contributions.
h. Employee Payroll Tax (Annual %): Estimate employee payroll tax expense as a percentage of employee compensation. You can also simply leave the default percentage. Employee payroll taxes typically include employer tax contributions and unemployment insurance.
i. Income Tax (Annual %): Estimate annual income tax expense as a percentage of taxable revenue. You can also simply leave the default percentage. Taxable revenue is generally your total income minus expenses. In most cases, the more you make, the more tax percentage you’ll need to allow for. Rates can be highly variable so you should consult a tax expert in your area.
2. Products: Enter offerings (including products and services) as needed. To add a new product or service, click the green “Add Product” button and a new line item will appear. You can delete any line item by selecting the line’s checkbox then activating the “Action” drop-down to select the “Delete Items” function. Estimate line item variables by individual months or click the “Trend” button at the far right of any line item to activate shortcut formula features. Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
a. Product Name: Enter any product name. If you wish to organize sets of products by lines, simply create a naming convention like“Sauces: BBQ.” Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
b. Unit Price: Enter your sales price for each product. For example, if you’re a manufacturer, enter your wholesale price. If you sell at both wholesale and retail prices, create separate line items for each.
c. Volume (monthly): Estimate how many units will be sold on a monthly basis. Estimate volume by individual months or click the “Trend” button at the far right of any line item to activate shortcut formula features. For seasonal businesses such as retail, you can model a single year to establish an annual sales pattern, then trend the pattern for succeeding years by adding an annual growth rate through Trending features.
d. COG %: Cost of Goods Sold is the amount of money required to make a product. This typically includes materials, labor and shipping (the inclusion of shipping is referred to as a “landed” cost). COGs do not include equipment, facilities and other overhead costs. COGs are represented as a percentage of sales price to indicate the degree to which a product is profitable. Seasoned business people know healthy ranges for COG percentages within their industry. If you have a list of costs that make up COGs, list this information in the footnotes section (footnotes print with reports).
e. Return Rate %: Estimate product returns as a percentage of sales. This can vary among industries. You can also include losses from theft and other revenue reductions.
f. % on Sales Commission: If you offer sales commissions, estimate the percentage of sales that will be subject to sales commissions.
g. Sales Commission %: If you offer sales commissions, define the commission percentage. And if you offer variable commission levels, create separate product line items for each commission percentage variable.
3. Assets: Enter assets such as facilities, equipment, computers, telecomm, intellectual property, land (non-depreciable), Intellectual Property (non-depreciable) and “other.” All asset types except land and intellectual property have built-in depreciation formulas that are reflected in charts and reports. To add a new asset, click the green “Add Asset” button and a new line item will appear. You can delete any line item by selecting the line’s checkbox then activating the “Action” drop-down to select the “Delete Items” function. Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
a. Asset Category: Enter an asset name by selecting from a drop-down list that includes facilities, equipment, computers, telecomm, intellectual property, land (non-depreciable), intellectual property (non-depreciable) and other. All asset types except land and intellectual property have built-in depreciation formulas that are reflected in charts and reports.
b. Asset Name: Enter any asset name. Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
c. Cost: Enter a cost for each line item.
d. Purchase Date: Enter a date of purchase for each line item. The cost of the asset will be spread over a term beginning on this date.
e. Years of Service: Enter the estimated number of years that an asset will be useful. The cost of the asset will be spread over this term in charts and reports.
f. Salvage Value: Estimate the residual value of the asset at the end of the usable term. This amount will be deducted from the use term and assumed to be sold at the end of the term, thus added to cash on hand at the end of the term.
4. Staff: Enter staff positions such as Management, Admin, Sales, Marketing, R&D, Production, Fulfillment & Distribution, Customer Service, Human Resources and Other. To add a new position, select “Employee” or “Owner’s Draw” then click the green “Add Position” button and a new line item will appear within the selected division. You can delete any line item by selecting the line’s checkbox then activating the “Action” drop-down to select the “Delete Items” function. Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
a. Employees: Add employee positions by selecting “Employee” then click the green “Add Position” button. A new line item will appear in the Employee division.
Employee Type: Select a position type by accessing the drop-down categories that include Management, Admin, Sales, Marketing, R&D, Production, Fulfillment & Distribution, Customer Service, Human Resources and Other.
Position Title: Enter a position title for each line item.
# Positions: Enter single or multiple positions.
Salary (monthly): Enter a monthly salary for each position by individual month or click the “Trend” button at the far right of any line item to activate shortcut formula features.
b. Owners Draw: Add an Owner’s position by selecting “Owner’s Draw” then click the green “Add Position” button. A new line item will appear in the Owner’s Draw division. Owner’s Draw is accounted for separately from Employee Salaries as Employee Benefits and Payroll Taxes are computed only on employee salaries.
Owner Name: Enter the owner’s name.
Monthly Draw: Enter a monthly draw for each owner by individual month or click the “Trend” button at the far right of any line item to activate shortcut formula features.
5. Marketing: Enter marketing initiatives such as Consultants, Print, Web, Ads, Travel, Entertainment and Other. To add a new marketing initiative, click the green “Add Item” button and a new line item will appear. You can delete any line item by selecting the line’s checkbox then activating the “Action” drop-down to select the “Delete Items” function. Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
a. Marketing Category: Select a marketing initiative type by accessing the drop-down categories that include Consultants, Print, Web, Ads, Travel, Entertainment and Other.
b. Item Name: Enter a name for each item.
c. Monthly Budget: Enter a monthly budget for each item by individual month or click the “Trend” button at the far right of any line item to activate shortcut formula features.
6. Admin: Enter administration costs such as Rent, Equipment, Maintenance, Data Services, Insurance, Supplies, Postage, Travel, Entertainment and Other. To add a new admin cost, click the green “Add Item” button and a new line item will appear. You can delete any line item by selecting the line’s checkbox then activating the “Action” drop-down to select the “Delete Items” function. Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
a. Administrative Category: Select an administrative cost type by accessing the drop-down categories that include Rent, Equipment, Maintenance, Data Services, Insurance, Supplies, Postage, Travel, Entertainment and Other.
b. Item Name: Enter a name for each item.
c. Monthly Budget: Enter a monthly budget for each item by individual month or click the “Trend” button at the far right of any line item to activate shortcut formula features.
7. Services: Enter service costs such as Legal, Accounting, Financial Consulting, Business Consulting, Information Technology, Research & Dev, Testing and Other. To add a new admin cost, click the green “Add Item” button and a new line item will appear. You can delete any line item by selecting the line’s checkbox then activating the “Action” drop-down to select the “Delete Items” function. Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
a. Services Category: Select a services cost type by accessing the drop-down categories that include Legal, Accounting, Financial Consulting, Business Consulting, Information Technology, Research & Dev, Testing and Other.
b. Item Name: Enter a name for each item.
c. Monthly Budget: Enter a monthly budget for each item by individual month or click the “Trend” button at the far right of any line item to activate shortcut formula features.
8. Funding: Add a new funding infusion by selecting “Equity”, “Loan”, “Grant” or “Donations” tab then click the green “Add Item” button and a new line item will appear within the selected division. You can delete any line item by selecting the line’s checkbox then activating the “Action” drop-down to select the “Delete Items” function. Note that you can reorder line items by click/dragging lines from the far left six dot ordering icon.
a. Equity: “Equity” is a cash infusion in exchange for ownership. Add an equity infusion by selecting the “Equity” tab, click the green “Add Item” button and a new line item will appear within the selected division. If the investment is entered in phases, create a separate line item for each phase so that infusions can be recorded by date and thus be accurately reflected in charts and reports.
Investor Name: Enter the investor’s name for each line item. The name can be an individual’s name or a legal entity. If the investment is entered in phases, create a naming system such as “Steve: Infusion 1” so that each infusion can be recorded by date.
Amount: Enter the amount of the infusion.
Funding Date: Enter the infusion date of the funding item.
Annual Dividends on Net Profit %: If dividends on equity ownership are disbursed each year, indicate an annual dividend percentage.
b. Loan: A “Loan” is a cash infusion that will be paid back with interest. Add a loan infusion by selecting the “Loan” tab, click the green “Add Item” button and a new line item will appear within the selected division. If the loan is entered in phases, create a separate line item for each phase so that infusions can be recorded by date and thus be accurately reflected in charts and reports.
Loan Name: Enter the loan name. If the loan is entered in phases, create a naming system such as “Steve: Loan 1” so that each infusion can be recorded by date.
Amount: Enter the amount of the infusion.
Funding Date: Enter the infusion date of the loan item.
Payback Start Date: Enter the beginning date that the loan will start being paid back.
Payback Interval: Select a payback interval from the drop-down choices of Monthly, Quarterly or Annual.
Pay Period (Years): Enter the number of years that the loan will be paid.
Interest %: Enter the loan’s interest rate as a percentage of the principal amount.
Interest Type: Select the type of loan interest from the drop-down choices of Simple or Compound. Simple Interest is a single interest amount irrespective of length of term. Compound Interest is charged every loan period on the principal balance of the loan.
c. Grant: A “Grant” is a cash infusion that is not paid back. Nonprofits often rely upon grants for funding. Add a grant infusion by selecting the “Grant” tab, click the green “Add Item” button and a new line item will appear within the selected division. If the grant is entered in phases, create a separate line item for each phase so that infusions can be recorded by date and thus be accurately reflected in charts and reports.
Grant Name: Enter the grant name. If the grant is entered in phases, create a naming system such as “City Grant: Phase 1” so that each infusion can be recorded by date.
Amount: Enter the amount of the infusion.
Funding Date: Enter the infusion date of the grant item.
d. Donation: A “Donation” is a cash infusion that is not paid back. Nonprofits often rely upon donations for funding. Add a donation infusion by selecting the “Donation” tab, click the green “Add Item” button and a new line item will appear within the selected division. If donations are entered in phases, create a separate line item for each phase so that infusions can be recorded by date and thus be accurately reflected in charts and reports.
Donation Name: Enter a donation name for each line item. The name can be an individual’s name or a class of donations such as, “Top 500 Annual Donors.” If a donation is given in phases, create a naming system such as “Steve: Winter Donation” so that each infusion can be recognized by a separate date.
Donation (Monthly): Enter donations by individual month or click the “Trend” button at the far right of any line item to activate shortcut formula features.
