FD Business Solutions Limited
Cheltenham
Cheltenham
Consulting with Purpose
FD Business Solutions is aimed at providing professional and pragmatic advice to local businesses.
Specialising in providing Finance Director (FD) solutions that can be tailored to meet your circumstances and budget.
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Business Strategy and Commercial Appraisal
Expert Guidance
Business Strategy
The objectives of company owners and/or senior management is to drive their business strategy. This strategic approach is usually very clear at the outset, but can easily become blurred over time. For example, to grow the customer base, it can be tempting to attempt to win all tenders for new business, at any price. In some circumstances, particularly when entering new markets, it may be appropriate to agree to “loss leader” deals. Although not profitable individually, the intention is they generate other, more profitable, revenue streams. If these do not materialise, the business may well grow in size, but not profitably.
“Turnover is vanity, profit is sanity!”
Profit Margin
Ultimately, in order to increase the bottom line, customer contracts must generate a healthy profit margin, after allocation of overheads. Overheads are the various costs incurred in running a business, not directly related to a particular product or service. These must be shared amongst the different products and services sold by the business. Without an appropriate overhead allocation method, it can be difficult to determine whether a particular new customer proposal is worthwhile, or at what price to pitch.
Commercial Appraisal & Profitability Analysis
FD Business Solutions can perform a commercial appraisal of a new contract, to determine whether or not it is a viable proposition. We can also review the profitability of existing contracts and pricing structures. Or we can assist with pricing strategy, by allocating overheads appropriately and using financial models. These need not be restricted to customer relationships. Such techniques can equally be applied to supplier contracts as well as internal arrangements, for example staff bonus and commission schemes.
Business Budgeting and Forecasting
What is a Budget?
A budget is essential for any business, to set out its future financial aims. It can cover any period, but typically businesses prepare a detailed plan for at least the next 12 months. This might be supplemented by a less detailed forecast for future periods. As well as a profit and loss account, it is usual practice to prepare a fully integrated suite to include a balance sheet and cash flow forecast.
Why Prepare a Budget?
A business budget has many different purposes. Its most common use is to review and benchmark actual results, which helps to spot areas of under- or over-performance. These items can then be analysed to understand the causes. Strengths can be exploited further and weaknesses addressed. As an expression of future expectations, a budget will indicate intervals at which asset purchases, funding and/or additional staff will be required. A budget will almost certainly be requested, alongside a formal business plan, in support of a funding application.
Cash Flow Forecast
It is arguably more important to prepare cash flow forecasts on a regular basis, alongside the profit and loss account. These are used to track expected movements in cash balances. Businesses do not normally fail because they do not make a profit, but because they run out of cash. It is usual practice to have a detailed cash flow forecast, showing individual transactions, covering a relatively short future period, with less detailed information for later periods. Whilst not essential, a balance sheet forecast will provide useful data as to how each component will change during the plan period, and can help track movements in working capital.
Management Information
A Comprehensive Approach
The Importance of Management Information
It is vital to know how your business is performing throughout the financial year, using real-time information. Otherwise, how will you know whether or not performance is better or worse than expected? Worryingly, and all too often, small businesses only discover how well they have done once each year, after their annual accounts have been produced.
In lieu of regular management information, they instead rely on their bank account balance(s) as their main indicator of performance. However, this approach is fraught with danger, as well as providing an extremely limited view. This is because there are many factors that affect a company’s bank balance, which will not necessarily reflect the actual level of profitability. In addition, annual accounts are prepared to comply with Companies House statutory requirements, and therefore follow a fixed format. As a consequence, they tend to omit valuable information, plus they are usually significantly out of date when available.
Finance and Funding
Expert Guidance
Finance Options
A business will often need finance to fund investment and to grow. Examples include the recruitment of additional staff and purchase of new equipment. If there are insufficient funds available internally, then it may be appropriate to bridge the gap via an external source.
There are many different types of finance, e.g. overdraft, fixed-term loan, HP, etc. Which are available to my business? Of these, which is most suitable? How do I secure it? And how do I know that I am not being over-charged? Small business owners will want to know the answers to these questions.
Funding & Grants
As well as borrowing, government funding or a grant could be an option, depending on the intended use. Again, smaller businesses may not be aware of their availability and/or qualification criteria.
Sources
Whilst banks are a traditional source of finance for many businesses, there are numerous other finance providers. Many of these specialise in certain types of finance, depending on its use and for how long it is needed.
Software Application Selection and Implementation
A Comprehensive Approach
Benefits of Finance Applications
In order to operate efficiently and produce timely and relevant information, Finance teams should use appropriate systems and applications. It is common practice within Finance departments to develop for spreadsheets for many specific purposes. These often cover important activities, including the production of management information. However, they have limitations, such as being slow to update, and can be prone to human error. The use of robust accounting and payroll applications enables financial data to be recorded accurately and consistently. They also reduce the incidence of mistakes, as well as assisting the reconciliation of key balances and compliance with statutory deadlines.
Working Capital and Cash Management
Expert Guidance
What is Working Capital?
Working capital is a common measure of a company’s liquidity, efficiency, and overall financial health. It is the amount of a company’s current assets less the amount of its current liabilities.
Because it includes cash, stock, debtors (accounts receivable), creditors (accounts payable) and other short-term liabilities (typically due within one year), it reflects the results of a company’s day-to-day activities, including debt collection, supplier payments, stock management and debt management.
