En este artículo
Precision financial planning is Banana Accounting's advanced budgeting system.
It allows you to build the company's financial future with the same rigour as actual accounting, creating detailed forecasts transaction by transaction and using the same chart of accounts and the same Debit/Credit logic as the accounting.
The forecast is not managed as a separate element: accounting and forecast data are part of the same system. Costs, revenues, financial position and liquidity therefore remain linked, and Banana automatically calculates the related projections.
In this tutorial, you will see how to use this method to create a complete economic and financial forecast, keep it up to date over time and compare it with actual data.
Origins of the system
Precision financial planning was developed from the need to use the same rigorous structure for the future that is already available for analysing the past.
Accounting makes it possible to know precisely how much has been sold, which costs have been incurred, how much customers still have to pay, which debts need to be settled and how much liquidity is available.
To make decisions, however, it is equally important to be able to look ahead and answer questions such as:
Precision financial planning is Banana Accounting's advanced budgeting system.
It allows you to build the company's financial future with the same rigour as actual accounting, creating detailed forecasts transaction by transaction and using the same chart of accounts and the same Debit/Credit logic as the accounting.
The forecast is not managed as a separate element: accounting and forecast data are part of the same system. Costs, revenues, financial position and liquidity therefore remain linked, and Banana automatically calculates the related projections.
In this tutorial, you will see how to use this method to create a complete economic and financial forecast, keep it up to date over time and compare it with actual data.
Origins of the system
Precision financial planning was developed from the need to use the same rigorous structure for the future that is already available for analysing the past.
Accounting makes it possible to know precisely how much has been sold, which costs have been incurred, how much customers still have to pay, which debts need to be settled and how much liquidity is available.
To make decisions, however, it is equally important to be able to look ahead and answer questions such as:
- sales and purchases
- receipts and payments
- salaries and other recurring costs
- investments and depreciation
- financing and repayments
For each event, you can specify when it will occur and the amount. If it is a recurring transaction, you can enter it only once and define the frequency and repetition period.
Banana uses these transactions to automatically generate future projections.
In practice, it is like doing the accounting of the future today.
An economic, balance sheet and financial forecast
Planning does not only mean forecasting costs and revenues.
Every business decision can simultaneously affect the financial result, financial position and liquidity. Precision financial planning keeps these effects linked by using accounting logic.
You can therefore automatically obtain:
- forecast income statement
- forecast balance sheet
- liquidity development
- comparison between budget and actual results
Each forecast transaction produces the corresponding accounting effects and keeps the different components of the forecast consistent.
Example: from sale to liquidity
Suppose you forecast a sale with payment at a later date.
Recording the sale determines:
- the expected revenue
- the receivable from the customer
When you also enter the expected receipt, the system determines:
- the decrease in the receivable from the customer
- the increase in liquidity
You can therefore see not only how much you expect to earn, but also when you expect to receive the money.
Liquidity-focused planning
A positive financial result does not necessarily mean having enough money to meet payments.
A company can be profitable and still face difficulties if receipts come after payments, or if investments, financing repayments or other outflows temporarily absorb the available liquidity.
This is why liquidity is a key element of precision financial planning.
By linking costs, revenues, receivables, payables, investments, financing, receipts and payments, you can see how planned operations will affect financial availability over time.
Planning thus becomes a tool for anticipating possible liquidity shortages and assessing decisions in good time, such as postponing an investment, changing payment terms or obtaining financing.
How to build the forecast
With Banana Accounting, you do not need to create a separate structure for planning.
You use:
- the same accounting file
- the same chart of accounts
- the same Debit/Credit logic
Future transactions are entered in the Budget table.
For each transaction, you can define, among other elements:
- date
- description
- Debit account and Credit account
- amount
- repetition frequency
- validity period
When necessary, you can also use VAT codes, cost centres, segments, formulas, quantities and prices.
For recurring transactions, you do not need to enter all future transactions. Enter the transaction only once, define the frequency and period, and Banana automatically generates the related projections.
The process can be summarised as follows:
Chart of accounts → Forecast transactions → Dates and repetitions → Forecast reports → Comparison with actual results
On the following pages of the tutorial, you will see step by step how to set up and use these elements.
Automating planning
Detailed planning can include a large number of future transactions. To avoid having to enter and update them manually one by one, Banana Accounting lets you automate many forecasting operations.
You can use repetitions, formulas, quantities and prices to automatically generate future transactions. This makes it possible to plan recurring operations, such as rent, salaries, sales, purchases and other periodic costs, by entering only the information needed to determine how they will develop over time.
Formulas also allow you to create forecasts based on other values and automate calculations such as depreciation, interest and other financial projections.
When you change a value on which the forecast is based, Banana automatically recalculates the linked values and updates the related projections.
In this way, you can also create detailed multi-year plans and keep them up to date without having to manually rebuild the entire budget.
Precise forecasts by period
With Precision Budgeting, you do not only get a forecast for the entire year.
Each transaction is assigned to the period in which you expect it to occur. You can therefore obtain detailed reports by month, quarter, year or other periods.
For example, if a cost is expected only in June, July and August, with different amounts for each month, you can enter the corresponding transactions with the expected dates and amounts.
In the reports, Banana will show each cost in the corresponding period, without affecting the other months.
The forecast therefore reflects when an event occurs and for what amount, instead of simply distributing an annual value evenly over the twelve months.
Planning that evolves over time
Financial planning should not be a static document prepared once a year.
During the course of business, conditions change: new orders arrive, some costs increase, investments are brought forward or postponed, and receipts may occur at different times from those originally expected.
You can update the plan at any time by:
- changing amounts
- changing dates
- adding new transactions
- deleting forecasts that are no longer valid
Banana automatically recalculates the projections and the related reports.
This makes it possible to use the system for continuous planning or a rolling budget, regularly updating forecasts based on the new information available.
The budget therefore does not remain a snapshot created at the beginning of the year, but becomes an operational tool that evolves together with the business.
Budget and actual results in the same system
One of the advantages of integration is that the forecast and actual accounting use the same structure.
As the accounting is updated, you can compare:
- what you had forecast
- what actually happened
- the related differences
You can therefore identify variances, understand their causes and use the information obtained to progressively update and improve future forecasts.
Compared with planning managed using separate spreadsheets, you do not have to manually keep the income statement, balance sheet and liquidity aligned: the links are created by the same accounting logic used to build the forecast.
An advanced tool
Precision financial planning is an advanced tool because it uses accounting logic to create and keep economic, balance sheet and financial forecasts linked together.
To make full use of its possibilities, it is therefore useful to be familiar with accounting, financial planning and receipt and payment flows.
This approach requires greater understanding than a simple annual budget, but it allows you to create much more detailed forecasts and consistently analyse the effects of future decisions on profitability, financial position and liquidity.
Who it is for
Precision Budgeting is aimed in particular at accounting experts, fiduciary firms, accountants and consultants who want to integrate detailed economic and financial planning into their accounting.
The system can be used both for your own accounting and for your clients' accounting.
For accounting professionals, this means going beyond recording and analysing what has already happened and offering clients a tool to:
- plan future business activities
- monitor profitability and liquidity
- assess investments and financing
- compare forecasts with actual results
- identify possible financial needs in advance
Precision financial planning therefore makes it possible to use accounting expertise not only to analyse the past, but also to support decisions about the future.