CARM SUMMIT
Budgets and Cash Flow in this
Brave New World
Submitted by Venture Accouting Group Ltd.
No matter who you are, where
you are or what you do in life,
in the past few months, you
have had to adapt to a harsh
new reality. A crisis that so critically affects
personal lives, business lives and known
cultural existence is a major mark in history.
These unfortunate events can provide
valuable lessons that can be incorporated
into daily lives and business decisions.
In the business world, perhaps no
better lesson can be learned than a lesson
of having plans in place to deal with drastic
change. No one plans to fail, but they can
plan to survive and even succeed in times
of dire straits. The harshness of that reality
has never been clearer than now.
As the crisis events of early 2020 began
to unfold, how many business owners
could sit down at their desk with a tool
that could tell them how their bottom line
and their cash flow could potentially be
affected by a serious pandemic? Not many.
How many of those business owners might
have breathed just a bit easier having a tool
to measure possible outcomes and understand
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the potential impacts such an event
might have on their business? Knowing
potential outcomes based on changing a
few variables within a business can truly
give a sense that, no matter what is happening,
feet are still planted firmly on
the ground.
Business financial modelling is not a
new concept. Financial lenders want to
see the picture of a business looking forward
(the budget) as much or more than
the rearview (the historical financial statements),
and business owners or managers
should too. A good budget model should
allow adjustment to key variables easily
and show the changed results instantly. A
professional budget model should do that
and give a clear picture of how those variables
will impact cash flow. Imagine going
into the COVID-19 pandemic and being
able to project with clarity how a business
would be affected and what federal and provincial
government subsidy programs and
orders would mean for the business. As the
economy begins to recover, and the cost of
government supports increases operating
costs for several years into future, imagine
being able to project for all of that and
know the business can continue to operate.
A global pandemic is certainly a lifealtering
event, but there can be any number
of unexpected events that may happen in
a year that can affect business. Financial
modelling is sound business practice and
can give a sense of control not otherwise
felt. Want to learn more about financial
modelling and how Venture Accounting
Group Ltd. can help? Get in touch, professionals
are here to help. n
Venture Accounting Group Ltd. has operated
within the City of Brandon for more
than 13 years, helping many businesses
and non-profit organizations improve their
financial health.
46 | Issue 1 2020 www.carm.ca
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