Its hard to believe how the world has been turned upside down since the turn of the year.
Who would ever have dreamt, as they sat down less than three months ago to pen their new year’s resolutions of the economic destruction we have seen, that Britain – and most of the world – would be in lockdown and that ghoulish details of infection rates and mortality would lead the daily news broadcasts. And the huge and critical importance we would all suddenly ascribe to personal protection equipment, virus test kits and ventilators – materials most outside the health industry would never likely have previously come across.
The speed with which this has all happened has been breathtaking – and terrifying. The distress it has caused – and will cause – in countries around the world is heart-breaking and it is difficult to know when or how it will end.
But, as horrific as the Covid-19 pandemic is – it will end, nobody is sure when, or how, but with equal certainty we can say the financial world will be a very different place when the virus is finally beaten.
All this makes budgeting especially difficult. Whilst budgeting is the tool for formulating how things may work out in uncertain times, none will previously have been faced with such uncertain times.
The good news, however, is Forecast 5 has tools to help.
Whilst we profess no more insight on how the world’s economies will cope with the current strains than anybody else, we are able to provide some structure to the boardroom decision makers. To the extent that all projections will have to be based on a clear set of assumptions, working forward from this foundation Forecast 5 can provide robust conclusions.
Firstly, unique amongst budgeting packages, Forecast 5 produces an integrated suite of forecast reports that financial people are used to – projected cashflows, balance sheets, profit and loss statements and funds flow statements.
We call this Four Way Forecasting.
These reports, being based on double entry conventions are balanced and tie together, right through to the Funds Flow projections, or as one client put it – the “what has happened to my cash statement”!
In one sense, it could be suggested that the least important of these forecast reports is the Profit and Loss projection; for the old adage that Cashflow is King must be even more true in these perilous times than ever before. But the contrary point is that the four reports, taken as a whole, allow the intelligent financial team to review what might happen to the firm under a range of postulated possible events.
Which brings us to probably the most important tool that Forecast 5 can offer; its “What if” capability. With this feature the planner can run a multitude of simulations all with differing income, cost and overhead assumptions, tracking the results into a spread of forecast results under a range of input circumstances.
Making full use of Forecast 5’s architecture, the What If multipliers can be applied to major sections of the business – for instance, all sales, or to individual areas of the business, or right down to specified income or cost streams. And the multipliers are cumulative. So, an application of 10% cost increase at the top level, 20% at the intermediate and 5% at an individual cost line compounds to deliver a cumulative 39% impact at the bottom line for that particular element of cost.
Do you need to flex your salaries and wages bill to see the effect on cashflow of an across the board three or a six month reduction by, say 25%? Forecast 5 handles this easily.
Turning to some of the other levers we can offer, part of the package of measures offered by Chancellor of the Exchequer Rishi Sunak was a three month VAT deferral, with payment postponed for up to 12 months. Forecast 5 has a field for VAT deferrals, as well as a work-around for the postponement. (And a word to the wise; if you have a VAT direct debit in place – don’t forget to cancel this, immediately!)
We can easily add loans under the “Business Interruption Loan Scheme” to your forecast and importantly, as these are loans not grants, the suite of reports produced by Forecast 5’ One Touch Reporting feature will contribute to the swift assembling of a Business Plan that will be essential to access these loans.
And similarly, the Interest Free loans of up to £250,000 can be included in your forecast, as well.
Under the “Coronavirus Job Retention Scheme” employers will be able to reclaim 80% of wages paid to furloughed workers up to £2,500 per month, effective from 1 March. Forecast 5 can model this, too.
Another feature being offered by Forecast 5 is a (3 month minimum) Work From Home licence. This is a free loan licence which can be installed at home equivalent to a Forecast 5 licence the employee was previously enjoying in the office.
Forecast 5 is the closest budgeting package to Sage Winforecast that has emerged since the demise of that much loved software. Having probably 95% of the features enjoyed by Winforecast’s users – and with perhaps another 40% or 50% besides – it is the forecasting package of choice of discerning accountants throughout the UK, who, because it is so familiar, have been able to migrate quickly and easily from Winforecast to Forecast 5!
We hope all our clients stay safe through the days ahead; with Forecast 5 they will help their businesses to stay safe, as well.