The CFO'S Perspective

Financial Projections for Startups – A How-To Guide

Financial projections are a critical component of a sound business plan. These projections (or “financial forecasts”) are used externally to obtain funding as well as internally to create a strategic growth roadmap with key milestones.

At the core of these projections are logical assumptions for revenue, COGS (cost of goods sold), SG&A (sales, general, and administrative) expenses, capital investments, and cash flow that serve as building blocks for the final figures that result. Because your financial projections rely on these pillars, it is crucial to find a balance with these inputs. Being too conservative or too aggressive with your assumptions will skew the resulting projections, damaging their overall credibility. The goal is to inspire confidence externally as well as internally while maintaining high ethical standards, which requires a balanced approach toward creating assumptions for financial projections.

Use existing financial information, even if it is limited by the newness of your business, to justify these assumptions and inform your financial forecasting process. Your resulting financial projections should include a P&L statement, cash flow statement, balance sheet, capitalization table, and strategic investment plan.

Topics: Funding Planning Financial Projections Financial Reports Forecasting Financing

Which Financial Statements are Required to Get Funding?

Lenders and investors will always ask for financial statements as part of the application process. When applying for funding, you will be required to provide both historical financial data and projected financial figures. Banks and investors will then analyze where the company has been and where it appears to be going to determine if its trajectory fits within acceptable risk parameters.

Topics: Funding Financial Reports Financing

Beyond GAAP – Financial Reporting for Nonprofits

GAAP compliance in financial statements is an essential underpinning for nonprofits and for-profit businesses alike. It is essential to be in GAAP compliance for audits, funding applications, etc. However, the standard GAAP financial statements may not be enough to ensure your statements will match your cash position at the end of the month. Additional perspectives are required to quickly assess the organization’s financial performance.

Topics: Non Profit Organizations Financial Reports gaap

Understanding New Revenue Recognition Guidelines for Nonprofits

For many nonprofit organizations, revenue recognition is one of the most challenging accounting issues they encounter.  The guidelines governing the recognition and classification of revenue are now, however, undergoing significant change.

Topics: Accounting Non Profit Organizations Financial Reports Audit

The Cash Flow Statement – The Forgotten Financial Statement

The Perks of Being Royalty

One of the best things about being the sole owner of a privately held company is that you have a great deal of discretion as to how your business is operated.  You get to make the rules.  It’s like being the King or Queen.

This includes deciding on the form and content of the financial information your accounting staff prepares. Particularly if you have no debt or outside investors, you can decide what you want to see and how often you want to see it.

Topics: Cash Flow Financial Reports