In this article
The financial forecasting tool of Banana Accounting allows everyone to create detailed and precise financial forecasts, including all the components needed for the business plan, with liquidity plan, budget and forecast income statement. It works faster and delivers better results than Excel.
The structure of the Business plan
The business plan is a plan that summarizes the activity and structure of a company, the opportunities that can be identified, the context in which it operates, the products or services that it wants to offer, the objectives that are envisaged to be achieved and the methods and means necessary to get there. The preparation of a business plan is aimed at realizing an idea and understanding what resources are required to implement it. The methodology is also applicable to social enterprises and projects.
The business plan basically consists of two parts:
- The descriptive section.
- The analysis of the situation, objectives, context, plans for implementation.
- The financial section.
- The Balance Sheet forecast.
- Income statement forecast.
- Cash flows.
- Liquidity plan.
- Investment plan.
- Financing strategy. Translates plans and objectives into financial terms.
If the business is an existing activity, the business plan must also contain a part relating to the past and present.
The descriptive section is set up with a word processor and presentation tools. Banana Accounting is instead used to prepare financial plans.
Planning-executing-controlling methodology
Banana Accounting is based on the plan-execute-control methodology, for which the financial forecast is integrated into accounting, uses the same Chart of Accounts and also operates with transactions similar to normal accounting transactions. The reports, such as the Balance Sheet, Income statement, etc., can be viewed with the estimated values, the accounting values or with both. The same file can be used to set up financial plans, keep accounts or both simultaneously.
To create a financial plan, proceed in the same way as when you create an accounting, with the difference, however, that instead of entering the data of the past, you insert those relating to the events that are expected in the future.
Creation of a planning file
All Banana Accounting accounting applications include financial planning. You must choose which type you want before starting:
- Cash Manager (free application)
Allows you to prepare liquidity plans, with the various income and expenses divided by category. - Income and expense accounting.
Allows you to have a complete Balance Sheet planning, including liquidity and income statement. This alternative does not require specific accounting training. - Double-entry accounting.
These are professional forecasts, complete with Balance Sheet, Income statement. - Double-entry accounting with foreign currency.
If you need to make forecasts with accounts in different currencies.
Template and chart of accounts
The selection of a template to choose, will depend on the complexity of the activity and the level of detail that you wish to have available when presenting. There are universal plans with not too complex a Chart of accounts structure.
On the Budget Start page, you will find a list of universal templates that can be used to start a planning.
It is advisable to use a comprehensive national Chart of accounts, if one wants the Balance Sheet and structured Income statement as a complete budget and if you wish to have everything already set up when accounting is kept.
If the template you have chosen does not yet contain it, add the Budget table.
In Excel, when preparing a financial plan, you try to insert the elements you need, because what you see is also what you print. With Banana Accounting, printing can be adapted. As a rule, only the items that are used are printed and you can have both detailed prints or with only the groups. You don't have to worry, if you have positions that you won't initially use, maybe might need them later on .
VAT management
Initially, it may be easier to leave the VAT aside and to account the net amounts. In case you want to account for VAT, you can choose the template that already integrates VAT. In the case that VAT is expected to play an important role, especially in the case of investments or aspects concerning liquidity, it is useful to use VAT mechanisms. You can also select an accounting with VAT and initially enter the values without VAT.
Information for starting
On the Start Budget page you will find general information for starting the schedule.
If you don't know Banana Accounting it might prove useful to get an idea by watching the video tutorial available.
The videos were made using an Income & Expense template, the way of use is however similar to other types of accounting.
Entering the opening balances
If the operation is an existing activity, i.e. doesn't start from scratch, you need to enter the opening balances in the Accounts table. The balances entered are for planning and accounting as explained on the Budget logic page.
Entering the budget data
Planning is carried out by inserting movements in the Budget table, in the same way as when keeping accounts. Recurring transactions, such as wages and rent, are indicate with one row. Entry of data is pretty quickly done.
By indicating the source and destination account, the program is able to prepare budget and income statement forecasts. Thus you have a comprehensive forecasting with identical data available.
Another important advantage is that you are able to indicate all the expense items in detail. If there are multiple employees, you can indicate each salary. You do not need to calculate the total amount by hand, and when changing one salary, only one line need to be modified.
You must indicate all probable financial events by entering appropriate records. From an operational point of view, inserting the movements is simple. The important job is to search for the important information. You must be able to determine all possible elements and values must be estimated correctly.