Chapter 6: What Is the Standard Process at COMMITLY?

CRASH COURSE CASH FLOW PLANNING

Chapter 6 : What is the usual procedure in COMMITLY?

COMMITLY's focus is on medium to long-term Cash flow planning. Especially in times of crisis, a clear strategy not only provides orientation, but also the opportunity to meet financial challenges in a targeted manner. In this chapter, you will learn how you can professionalize your Cash flow planning with the help of COMMITLY.

Chapter 1 - Introduction Cash flow planning

Chapter 2 - Why Cash flow planning at all ?

Chapter 3 - Quality of the Cash flow planning

Chapter 4 - How to create a Cash flow planning?

Chapter 5 - Short-term Cash flow planning

Chapter 6 - COMMITLY common procedure

Chapter 7 - Webinar on Short-Time Work in Austria

Bonus: eBook Liquidity Management

Medium to long-term Cash flow planning: a systematic approach

Especially in a crisis, long-term Cash flow planning is indispensable. One example of this are KfW business loanswhose maximum loan amount to the current financing requirements for the next 12 to 18 months depending on the size of the company. For companies, this means that precise and forward-looking planning is required to secure the necessary financing.

Let us briefly use a hypothetical example to illustrate how COMMITLY can support medium to long-term Cash flow planning :

Step 1: How do you get started?

With COMMITLY you can plan your cash flow planning and get an overview of financial developments over the coming months. Follow these steps:

Set up forecast
You are in the planning tab and enter all items relevant to you in the forecast column (FC), e.g. Incoming and outgoing payments. Start with your most important expenditure items, e.g. salaries, travel expenses, accounting, consulting, marketing, etc.. These are usually easy to forecast.

Gross amount
Enter all amounts including sales tax, as the transactions are received in gross on the account or are to be paid from the account.
Categories
Customize the categories to your needs. Help: Help: Create new categories

Step 2: Synchronize and analyze

A regular synchronization of the data (possible a maximum of 4 times a day) ensures that all data is kept up to date and enables simple cash flow monitoring. Unplanned items, outliers and deviations from plan can thus be identified more quickly.

Step 3: Create a plan and gain insight

When the company grows, investments are often the next step. However, for the bank to approve an overdraft facility, detailed planning is required. detailed planning for the financial year is required.

With COMMITLY you can create this planning directly on the basis of the current forecast.

The plan then already contains all available actual figures as well as the values from the forecast.
On this basis, you finalise the plan from your point of view and hand it over to the bank.

Coordination with third parties (banks, investors, shareholders, etc.)

COMMITLY offers a structured approach for loan negotiations or discussions with investors:

Fixed plans: By 'committing' your plans, they become fixed, i.e. they can no longer be changed. Read our article on this: Committing, what is that?
Target/actual deviations and reports can be created on this basis.
The fact that the plan can no longer be changed means that you are always in agreement with the bank.
Committing also turns the plan into a new forecast.

The fact that the plan can no longer be changed means that you are always in agreement with the bank.
Committing also turns the plan into a new forecast.

We have described here which plans should ultimately be sent to the bank: What reports banks want to see

Maintain flexibility, even if the future turns out differently

Even after a few months, it can happen that planned receipts fail to materialize. No problem - adjust the forecast in COMMITLY without changing the values already transmitted to the bank and maintain an operational overview.

Adjust forecast: Update the forecast to keep an eye on developments.
Plan remains unchanged: The committed plan remains the same, only the forecast changes.
Target/actual comparison: Compare the current figures with the plan submitted to the bank.
Consistent reports: Reports continue to refer to the committed plan.

New business opportunities through targeted financial planning

Growth requires planning. With COMMITLY, you can realistically evaluate new business opportunities and recognize the financial impact at an early stage.

Start with a scenario planning on the basis of your forecast. This will show you what capital requirements your project requires and whether a (subsidized) loan is necessary.

So that your operational planning remains clear:

Investments are recognized as cash flow from investment are recognized.
Loans run under Cash flow from financing.

COMMITLY uses the direct methodto distinguish between operating business, investments and financing. financing. You can find a detailed explanation [here].

This keeps your operating cash flow clearly structured and helps you to make well-founded decisions - for successful expansion.

Need for a revised plan

It often happens that the bank requests an updated plan - understandably, as business developments are constantly changing.

Create a new plan: Use your current forecast to create the revised plan.
Coordination with the bank: Present and agree the new plan with the bank.
Commit the plan: After the release, commit the new plan in COMMITLY.
Restart the cycle: The process starts again - always with current and precise data.

Summary

Committee (fixed) plan:
A firmly adopted plan (e.g. for a financial year) that can no longer be changed. It serves as the basis for target/actual comparisons and for the forecast.
New plan:
If adjustments are necessary, a new plan is created based on the committed plan. Before committing, the old plan should be inactive should be set to inactive.
Forecast:
The forecast combines actual data and the committed plan and always remains flexible. It can be adjusted at any time, while the committed plan remains unchanged.
Deviations:
If the forecast deviates too much from the committed plan, a new plan can be created based on the current forecast (step 2).
Rolling planning system:
The forecast is continuously adjusted ("rolling"), while the original annual plan remains unchanged. This ensures that the original targets can be reviewed and the forecast is always up to date.

Cash flow planning made easy - All decisions firmly under control.

COMMITLY is your software tool for better cash flow management - developed by financial experts and entrepreneurs who know what is important when it comes to cash flow and Cash flow planning.