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Using the Dashboard Information Areas

Trend Graphs

Does the historical data indicate that there is a potential future problem that I should be aware of?

The monthly and quarterly graphs indicate trends.  Each of these blocks has a drop down menu that is used to toggle between the various graphs.  Trends that indicate that you need to spend some time looking into to avoid potential future issues include:

  • Gross Profit to OPEX graph
    • Gross profit is decreasing every month – either your cost of sales isn’t under control or you are not selling enough of your products / services.   Click on the Gross Profit line in the chart and start investigating now.
    • OPEX is higher than Gross Profit – you are going to run out of cash if this continues. Click on the OPEX line in the chart and start investigating now.
    • OPEX is increasing every month means that, unless these are planned increases, your operating expenses are not under control.  Click on the OPEX line in the chart and start investigating before its too late.
  • Company Trends graph
    • Average Sales should always be higher than Average Spend.  If this is not the case or if Average Sales is decreasing and Average Spend is increasing, you are in danger of losing your business.  Use the Company Health module to figure out where you should focus your sales efforts and which expenses you need to focus on decreasing.
    • Average Net Profit is on a downward trend – you need to focus on selling more of your top 3 products or increasing the gross profit margin on these products. Use the Company Health module to figure out where you should focus your sales and profit margin rectification efforts.

Financial Indicators

The Financial Indicators section has two functions:

  1. It provides you with the figures that you need at hand when making high level cash flow decisions.  As an example:
    • You have 10,000 in the bank and you want to know if you will have enough cash to rent a new office which will cost and extra 1,000 a month.  Your average income is 40,000 and your average expense is 38,000 so it is probably not wise to rent the office right now.
  2. Is futures cash being managed well?
    • If your Creditor Days is less than your Debtor Days, you are spending money faster than you are collecting it. Implement a process to delay your bill payments and a process to ensure that your customers settle invoices sooner.

Financial Health

Is there a potential danger of not having enough cash if things go wrong?

Funancial’s definition of liquidity is not the same as the definition used by the rest of the industry. Our definition is used to gives you an idea of – if you were forced to liquidate your company today – how much cash you are likely to have in the bank if:

  • all customers settled their invoices today
  • all debts to the government were paid today
  • all debts to your creditors were paid today

This liquidity does not take medium or long-term assets and liabilities into account (these assets would take too long to turn into cash)

Important: This liquidity does not take medium or long-term assets and liabilities into account. This is so as realistically these assets would take too long to turn into cash.

Using the Liquidity panel to make decisions:

  • If your Cash in Bank is lower that your Average Cost Of Sales plus your Average Operating Expense, you should probably start delaying payments to creditors and calling your debtors to ask them to settle invoices as soon as possible. Use the Debtors value to estimate the amount of cash you could potentially collect in the short term.
  • If your Cash in Bank plus Debtors – All is less than Creditors – All, there is a potential danger and you need to increase sales, increase gross profit or potentially reduce operating expenses soon.
  • If Cash in Bank is less than the Taxes value, you probably need to start chasing your customers for payments now. Penalties and interest from the government will hurt, so make sure that you have this money available when the payment is due.
  • Use the Liquidity figure to decide whether you need to concentrate on creating plans to reduce short term risk (negative liquidity) or see how well you are doing at managing short-term risk (positive liquidity)
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