Business Financial Management Services Brisbane

Business Financial Management uses Cash Flow, budgets, forecasts, Management Reporting and financial analysis to help business owners understand performance, anticipate financial requirements and make informed business decisions.

Need better financial information to manage Cash Flow, profitability, Working Capital or a significant business decision? Work directly with Management Accountant and Business Adviser Shannon Drew.

What Are Business Financial Management Services?

Business Financial Management Services use financial information, forecasts and analysis to help you understand how your business is performing, anticipate what is likely to happen next and make financial and commercial decisions with better information.

Your Bookkeeper may maintain the financial records and your Accountant may prepare financial statements, tax returns and other accounting work within their engagement. Those functions do not necessarily provide the forward-looking information you need to manage the business. A Profit and Loss Statement can show what was recorded last month without telling you whether Cash Flow will tighten in eight weeks, why Gross Margin has fallen, whether growth can be funded or which part of the business is producing an adequate return.

Financial Management sits closer to the decisions being made inside the business. Shannon works with the information you already have, identifies what management cannot currently see and develops the reporting, forecasts or financial analysis needed to answer those questions.

Blaze Business & Legal does not provide taxation advice. We can work alongside your existing Accountant, Bookkeeper and other advisers rather than duplicating the work they already perform.

What Business Financial Management Services Do We Provide?

The services we provide to your business depends on the financial issue you are trying to understand and the decisions you need to make. Our Business Financial Management Services can include:

• Cash Flow Management and Cash Flow Forecasting
• annual budgets and rolling Financial Forecasts
• Management Reporting
• Construction Financial Management
• budget versus actual analysis
• Profitability and Margin Analysis
• Teaching you how to increase profits in your business
• Working Capital Management
• Financial Modelling
• scenario and sensitivity analysis
• financial KPI development and reporting
• cost and Overhead analysis
• financial performance reviews
• financial analysis of growth and expansion plans
• funding requirement analysis
• review of financial systems and reporting
• financial support for significant management and business decisions
• ongoing Virtual CFO Services.

A business experiencing Cash Flow pressure may initially need a forecast and Working Capital analysis. Another may have reliable accounts but poor Management Reporting. An owner considering an expansion, substantial recruitment or a major investment may need Financial Modelling before deciding whether the expected return justifies the additional cost and Cash Flow requirement.

The scope should follow the business question rather than starting with a standard package of reports.

Are Your Financial Reports Helping You Run the Business?

Accurate accounts are essential, but accuracy alone does not make a report useful for management.

The information needs to tell you something you can act on. Depending on the business, that may mean understanding Gross Margin by service or division, Payroll as a percentage of revenue, Debtor days, Working Capital, Cash Flow, forecast versus actual results, Overhead recovery or the performance of different parts of the business.

We often start by looking at what management currently receives and the decisions those reports are supposed to support. A lengthy monthly reporting pack is of limited use if the owner still cannot work out why Margin has moved or whether there will be enough cash for commitments falling due next month.

The reporting also needs to arrive soon enough to change what happens next. Finding out several months later that costs have been running above budget explains the historical result, but management has lost several months in which it could have investigated and responded.

Shannon can review your existing Management Reporting, identify gaps and help put in place reporting that reflects how your business actually makes and spends money.

Why Can a Profitable Business Still Have Cash Flow Problems?

A business can make a profit and still run short of cash because Profit, Cash Flow and Working Capital measure different parts of its financial position.

You may have recorded revenue that customers have not yet paid. Cash may be tied up in Debtors, WIP or inventory. Payroll and suppliers may need to be paid before customer receipts arrive. Capital expenditure, loan principal repayments and other cash commitments can also reduce the bank balance without appearing as an equivalent expense in the Profit and Loss Statement.

Timing becomes particularly important when a business is growing. The Profit and Loss Statement may show that the additional work is profitable while the business has to fund employees, suppliers and operating costs well before the additional revenue turns into cash.

A useful Cash Flow Forecast brings those timing differences together. It allows you to see when receipts are expected, when payments fall due and where the business may need additional Working Capital before the bank balance forces the decision.

For construction businesses, Cash Flow requires more specialised analysis of Project Claims, WIP, Retention and Project payment cycles. Our Construction Cash Flow Forecasting guide and 13-week forecasting tools deal with those issues in detail.

Why Can Business Growth Put More Pressure on Cash?

Growth often requires the business to spend money before it receives the additional cash generated by that growth.

Employees may need to be recruited and paid before their work produces additional receipts. More inventory may be required. New premises, equipment or systems may need to be paid for. A larger customer or contract may also bring longer payment cycles or require considerably more expenditure before the first substantial payment arrives.

This creates a Working Capital requirement that is easy to underestimate when a growth decision is assessed mainly by reference to additional revenue.

For example, increasing annual revenue by $2 million does not mean an additional $2 million arrives before the associated costs are incurred. If customers pay 45 or 60 days after invoicing while employees and suppliers are paid earlier, the business has to fund that timing difference. A profitable expansion can therefore put substantial pressure on Cash Flow during the period when it is being implemented.

Before committing to significant growth, Shannon can model the expected revenue, Margin, additional costs, Working Capital requirement and timing of cash receipts and payments. The analysis can also test what happens if sales grow more slowly, customers pay later or costs are higher than originally assumed.

What Is the Difference Between a Budget and a Financial Forecast?

A budget records what the business planned to achieve for a particular period. A Financial Forecast uses the information now available to estimate what the business is actually likely to achieve.

The distinction becomes more useful as the year progresses. If revenue is below budget after four months, Payroll has increased and a planned equipment purchase has been brought forward, the original budget remains useful as the benchmark. It is no longer a reliable estimate of the expected year-end position.

A rolling Financial Forecast incorporates those changes. Management can compare the original budget with actual performance and the current forecast rather than continuing to make decisions against assumptions that are already out of date.

The differences between budget and actual results can also tell you where to investigate. A recurring Margin variance may point to pricing or cost problems. Payroll consistently exceeding budget may reflect recruitment, utilisation or productivity issues. Revenue may be on budget while Cash Flow remains below forecast because customers are taking longer to pay.

The useful work begins with understanding what caused the variance and what it means for the rest of the period.

Do You Know Which Parts of Your Business Are Actually Making Money?

A whole-of-business profit figure can hide very different results underneath it.

One service, division, location, customer group or Project may be producing a strong Margin while another consumes substantial resources for little return. If all revenue and costs are consolidated into one result, management may see that the business made a profit without being able to identify where that profit was earned.

The way costs are allocated can also change the picture. A service may appear profitable when only its direct costs are measured, but produce a very different result once the management time, premises, systems and other Overheads required to deliver it are properly considered.

Profitability Analysis helps break the result down into useful parts. The appropriate analysis depends on how the business operates, but it may involve revenue, direct costs, Gross Margin, contribution to Overheads and Net Profit across services, customers, locations, divisions or other meaningful business units.

That information can affect pricing, staffing, service mix, customer selection and investment decisions. It can also identify where management has been putting time and resources into an area that is not producing the expected financial return.

Financial Modelling Before You Commit the Business

Significant business decisions usually involve assumptions about what will happen after the decision is made. Financial Modelling makes those assumptions visible and tests their financial consequences.

A model might assess a new location, additional employees, a new service, major equipment, a substantial contract, changes to pricing, an acquisition or a significant expansion. The inputs can include expected revenue, Gross Margin, Payroll, Overheads, capital expenditure, debt commitments, Working Capital and the timing of receipts and payments.

The initial model is only one version of what could happen. Scenario and sensitivity analysis can then test the effect of changing important assumptions. If expected revenue is 15% lower, does the proposal still work? What happens if recruitment occurs three months before the additional revenue arrives? How much additional Working Capital is required if Debtor days increase from 30 to 50?

This does not turn an uncertain business decision into a certain one. It gives you a clearer view of the financial exposure before money is committed and identifies the assumptions that have the greatest effect on the result.

Do You Need More Business Finance, or Do You Need to Fix the Cause of the Cash Shortfall?

When a business needs cash, additional finance is one possible response. Before increasing debt, it is worth working out why the additional cash is required and whether borrowing addresses that cause.

There are legitimate reasons for funding a business. Rapid growth can create a temporary Working Capital requirement. Equipment may have a long useful life and be better funded over time. A business may need additional financial capacity for a significant expansion or acquisition.

The same cash shortage can also arise because customers are paying slowly, Margins have fallen, Overheads have increased, inventory is absorbing too much cash or part of the business is operating at a loss. Additional borrowing in those circumstances may provide temporary liquidity without changing the underlying financial performance.

Shannon can analyse the current financial position, Cash Flow Forecast, Working Capital requirement and existing finance commitments to work out how much funding the business appears to require and what is driving that requirement. Where external Business Finance is appropriate, he can also prepare forecasts and financial analysis for discussions with your bank, Accountant or Finance Broker.

Blaze Business & Legal does not act as a Finance Broker and does not provide Financial Product Advice.

When Should a Business Bring in Financial Management Support?

Financial Management support can be useful when the information available to management is no longer keeping pace with the size or complexity of the business.

Cash Flow becoming harder to predict is one common trigger. Others include revenue increasing without a corresponding improvement in cash, Margin falling without a clear explanation, budgets repeatedly missing actual results, increasing debt, Management Reports that provide figures without useful analysis or an owner who cannot readily see which areas of the business are producing an adequate return.

A significant decision can create a more specific need. Before taking on substantial fixed costs, expanding into a new location, acquiring a business or committing to another large investment, management may need a forecast or financial model that shows the effect on Cash Flow and profitability.

Sometimes the work required is relatively contained. An existing forecast may need to be repaired, or Management Reporting may need several additional measures. In other businesses, the financial management process has developed piecemeal as the business has grown and needs a more substantial review.

What Is the Difference Between Business Financial Management and Virtual CFO Services?

Business Financial Management can be provided for a defined problem, decision or financial project. Virtual CFO Services involve ongoing senior financial support within the business.

A defined engagement may involve building a Financial Forecast, analysing profitability, improving Management Reporting or modelling a proposed expansion. Once the work is complete, your internal team may be able to maintain the process.

A Virtual CFO engagement is more appropriate where management needs regular senior financial involvement. Shannon can work with the business on ongoing Cash Flow Forecasting, budgets, Management Reporting, financial analysis and financial input into management decisions without the business employing a full-time CFO.

Read more about our Virtual CFO Services.

Do You Run a Construction Business?

Construction Financial Management needs to connect the financial performance of the company with the financial position of its Projects.

Progress Claims, WIP, Retention, Variations, committed costs, cost to complete and Project Margin can materially affect Cash Flow and the eventual business result. A consolidated Profit and Loss Statement does not necessarily show management which Projects are losing Margin or where Project activity is creating Working Capital pressure.

Shannon has more than 25 years of Construction Management Accounting experience, including working inside construction businesses from smaller trade Contractors through to large Head Contractors. Our specialist Construction Financial Management and Cash Flow Control Services cover these construction-specific financial issues.

Financial Decisions Can Also Have Commercial and Legal Consequences

The assumptions in a financial model do not operate separately from the commercial arrangements that create the revenue, costs and payment timing.

A forecast may assume payment within 30 days while a proposed contract provides a longer payment cycle. An expansion may require changes to the company’s ownership or Business Structure. Shareholders may be contributing additional funds that need to be properly documented. A proposed finance facility may contain guarantees, securities, covenants and default provisions that need to be understood before the company signs.

This is one of the areas where our broader Business Advisory Services can assist. Shannon can undertake the Management Accounting and financial analysis while Rachelle Hare can advise separately on the commercial, contractual, governance or Business Structuring issues affecting the same decision.

Where Legal Advice is required, Rachelle is separately engaged as the Lawyer. Her Commercial Law Services include Commercial Contracts, Business Structuring, Shareholder and Director arrangements, Corporate Governance, Business Restructuring and other Commercial Law issues.

Who Provides Our Business Financial Management Services?

Shannon Drew | Management Accountant, Virtual CFO and Business Adviser

Shannon Drew has more than 25 years of experience in Management Accounting, Financial Management and business operations. His background includes working inside businesses where financial reporting has to do more than record what has already happened. Management needs to know where the business is heading and what is creating the result.

His work includes Cash Flow Forecasting, budgeting, Financial Forecasting, Management Reporting, Financial Modelling, Working Capital, pricing, Margin and financial performance analysis. He also acts as a Virtual CFO where a business needs that financial capability on an ongoing basis.

Shannon’s experience includes substantial work in the construction industry, from smaller trade Contractors through to large Head Contractors. That experience is particularly relevant where the financial position of the business depends on the performance and Cash Flow of multiple Projects.

Rachelle Hare | Commercial Lawyer, Commercial Manager and Business Adviser

Rachelle Hare has more than 25 years of experience across Commercial Law, Construction Law, General Counsel, Commercial Management and Business Advisory, including working inside businesses and owning businesses herself.

Rachelle’s involvement is relevant where the financial analysis identifies a wider commercial, contractual, governance or Business Structuring issue. She works with Shannon on Business Advisory engagements and can separately provide Legal Services where Legal Advice is required. (Rachelle only provides Legal Advice when Blaze Business & Legal is formally engaged to provide Legal Services.)

How Does a Business Financial Management Engagement Work?

A Strategy Session with Shannon is usually the starting point when you have a financial problem to work through or need help assessing a significant decision.

The Strategy Session is $650 + GST for 60 minutes. Shannon uses the session to understand the issue, the financial information you already have, what management currently knows and what still needs to be worked out.

You can use the Strategy Session as a standalone engagement. There is no obligation to proceed with further work, and you can take the preliminary plan from the session and implement it yourself. The Strategy Session does not include written advice unless that is separately quoted.

If further work is required, we will scope it after the session based on what needs to be done. That might involve a defined Financial Management project, Financial Modelling, Management Reporting work, ongoing Business Advisory or a Virtual CFO engagement.

Ongoing Small Business Consulting is available at $350 + GST per hour per consultant where an hourly engagement is appropriate.

Book a Strategy Session with Shannon Drew

Or call us direct on (07) 3063 3373.

Business Financial Management Brisbane, Queensland and Australia

Blaze Business & Legal provides Business Financial Management Services from our South Brisbane office to businesses in Brisbane, throughout Queensland and across Australia.

We work directly with business owners and decision-makers by phone, videoconference and in person where appropriate.

Blaze Business & Legal
Suite 8, Level 7
154 Melbourne Street
South Brisbane QLD 4101

Phone: (07) 3063 3373
Email: enquiry@blazebusinessandlegal.com.au

Opening Hours:
Monday to Saturday: 6:00 am to 10:00 pm
Sunday: Closed

FAQs About Business Financial Management

1. What is Business Financial Management?

Business Financial Management is the use of financial information, forecasts and analysis to help management run the business and make decisions. It can include Cash Flow Management, budgets, Financial Forecasting, Management Reporting, Working Capital, Profitability Analysis and Financial Modelling, with the work focused on the information management needs to understand current performance and assess what is likely to happen next.

2. What does a Financial Management Consultant do?

A Financial Management Consultant analyses the financial performance and future financial requirements of a business and helps management use that information when making decisions. Depending on the engagement, the work can include Cash Flow Forecasting, Management Reporting, budgets and forecasts, Profitability Analysis, Working Capital, Financial Modelling and investigation of financial performance issues.

3. What is the difference between Financial Management and accounting?

The difference between Financial Management and accounting is primarily the purpose for which the financial information is being used. Accounting can include financial statements, taxation and compliance work, while Financial Management uses financial information, forecasts and analysis to support management decisions about Cash Flow, performance, profitability, Working Capital and the future financial position of the business.

4. Can Financial Management help with Cash Flow problems?

Financial Management can help with Cash Flow problems by identifying when pressure is expected to arise and investigating what is causing it. The analysis may include Debtors, Working Capital, Margin, Payroll, Overheads, inventory, payment timing, finance commitments and expected receipts and payments, with the appropriate response depending on what the figures show.

5. What is the difference between a budget and a Financial Forecast?

The difference between a budget and a Financial Forecast is that the budget records what the business originally planned to achieve, while the Financial Forecast updates the expected outcome using current information. Comparing the budget, actual results and current forecast helps management identify where performance has moved away from the original assumptions and assess what that means for the remaining period.

6. Can you help me work out how much finance my business needs?

We can help you work out how much Business Finance appears to be required by analysing the Cash Flow Forecast, Working Capital requirements, existing commitments and the reason additional funding is needed. Blaze Business & Legal does not act as a Finance Broker or provide Financial Product Advice, but Shannon can prepare financial forecasts and analysis for discussions with your bank, Accountant or Finance Broker.

7. What is the difference between Financial Management and Virtual CFO Services?

The difference between Financial Management and Virtual CFO Services is generally the extent and continuity of the engagement. Financial Management can address a defined issue or project such as a forecast, Financial Model or Management Reporting review, while Virtual CFO Services provide ongoing senior financial support across reporting, forecasting, analysis and management decisions.

8. Do you provide Financial Management for construction businesses?

We provide specialist Financial Management for construction businesses through our Construction Financial Management and Cash Flow Control Services. This work takes account of construction-specific financial issues including Project Cash Flow, WIP, Retention, Progress Claims, Variations, committed costs, Project Margin and cost to complete.

Book a Business Financial Management Strategy Session

If you need to understand a Cash Flow problem, improve your financial reporting or assess the financial effect of a significant business decision, book a Strategy Session with Shannon Drew.

The session gives you 60 minutes with Shannon for $650 + GST to work through the issue, identify what the existing financial information shows and decide what needs to be investigated or changed next. You can implement the preliminary plan yourself or ask us to quote further work.

Book a Strategy Session with Shannon

Or call (07) 3063 3373.