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Implementing MYOB ProfitOptimiser in your Practice
Introducing your trainer… Richard J. Wood  MyCorporateDoctor.com.au
Today’s Aim: “To implement MYOB ProfitOptimiser in your practice, deliver value add services to your clients and form stro...
Aims and Objectives <ul><li>Aim </li></ul><ul><li>MYOB ProfitOptimiser will become the foundation of effective communicati...
Agenda  <ul><ul><li>A. Welcome and Introduction to Value Added Services </li></ul></ul><ul><ul><li>B. Review of the Key MY...
Expected Outcomes <ul><li>Employ a standard tool for financial analysis, interpretation and discussion across broad custom...
Introduction to  Value Added Services
The Dilemma  <ul><li>Profit margins are shrinking on Accounting and taxation work </li></ul><ul><li>Many Accountants are r...
Client Service Level Continuum Level 5 Level 4 Level 3 Level 2 Level 1 Profit and Loss Balance Sheet Statement of  Cash Fl...
Move from Compliance to Reliance Level 5 Level 4 Level 3 Level   2 Level 1 COMPLIANCE RELIANCE Technical Foundation Thorou...
Using MYOB ProfitOptimiser  in an Accounting Firm
Stages of Accounting Collecting Recording Summarising Analysing
Working Capital % <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li></u...
Gross Margin % <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>COGS </li></ul><ul...
Net Profitability <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>COGS </li></ul>...
Interest Cover EBIT – Key Covenant Ratio <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul>...
Current Ratio <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Days Receivable </li></ul><ul><li>Days Inve...
Activity <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li></ul><ul><li...
Total Liability/Equity <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Creditor days </li></ul><ul><li>Ot...
Equity to Total Assets <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Days Receivable </li></ul><ul><li>...
Cash Flow <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Change in Net Assets </li></ul><ul><li>Change i...
Debt to Equity <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Interest expense </li></ul><ul><li>Short/l...
ROCE % <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li></ul><ul><li>C...
Cash After Operations <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li...
The MYOB ProfitOptimiser Consultation Process
How Accountants can use MYOB ProfitOptimiser <ul><li>As a Bureau Service for clients to improve their financial performanc...
How Accountants can use MYOB ProfitOptimiser <ul><li>By working with clients to devise ‘What If’ scenarios to improve fina...
The Ideal Consultation – Part A <ul><li>Explain Loading screen </li></ul><ul><li>Explain Strategy screen (6 items max) </l...
The Ideal Consultation – Part B <ul><li>Perform What-If Analysis (2-3) </li></ul><ul><li>Undertake Goal Seeking (1 only) <...
The Ideal Consultation – Part C <ul><li>Provide Financial Diagnostic Report pre improvements </li></ul><ul><li>Organise ne...
Identify Strengths and Manage Issues The customer’s ability to service the loan <ul><li>Today’s debt is repaid from tomorr...
Identify Strengths and Manage Issues Identify issues, communicating the issues with the customer and working with the cust...
Identify Strengths and Manage Issues Using covenants as a risk control mechanism <ul><li>Covenants should be used as early...
Identify Strengths and Manage Issues Short Term  Liquidity <ul><li>Working Capital Management </li></ul><ul><li>The impact...
Identify Strengths and Manage Issues Long Term  Solvency <ul><li>The Balance Sheet structure </li></ul><ul><li>Valuing the...
Identify Strengths and Manage Issues A Quick Business Diagnosis <ul><li>Is the Gross Margin % equal to or greater than tha...
Lets do this together ! Successful customer = Successful practice <ul><li>Transparency - communicating credit requirements...
Financial Performance Assessment …Four Customer Perspectives Profitability Cash Flow & Funding Working Capital Management ...
MYOB ProfitOptimiser and the Banks Using MYOB ProfitOptimiser  in the Banking Sector
MYOB ProfitOptimiser & Australian Banks
The Partnership Model Bank
Two perspectives of Financial Performance in the  Dialogue Channel Non-Current Asset  Management Financial performance and...
A Typical Loan Scenario Bank Reports  Provided Numerous interpretive phone calls  Paper  based application  submitted Clie...
Case Studies Your Customer  A Case Study and Presentation
MYOB ProfitOptimiser  case study preparation <ul><li>Required preparation activities for participants… </li></ul><ul><li>P...
Your customer - A case study and presentation <ul><li>Required ... </li></ul><ul><li>Load your customer case study into MY...
Questions and Answers
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  1. 1. Implementing MYOB ProfitOptimiser in your Practice
  2. 2. Introducing your trainer… Richard J. Wood MyCorporateDoctor.com.au
  3. 3. Today’s Aim: “To implement MYOB ProfitOptimiser in your practice, deliver value add services to your clients and form strong partnerships ”
  4. 4. Aims and Objectives <ul><li>Aim </li></ul><ul><li>MYOB ProfitOptimiser will become the foundation of effective communication between accountants, their customers and the Banks – it is imperative that you are competent and confident in its use as a partnership tool </li></ul><ul><li>Objectives </li></ul><ul><li>Deliver a robust framework around undertaking various financial analyses using MYOB ProfitOptimiser and develop this into a basis for strategic dialogue for customer discussion - communicating outcomes in a confident and coherent manner </li></ul><ul><li>Prepare you for the type of questions that you might expect to field in the use of MYOB ProfitOptimiser with customers and Banks </li></ul><ul><li>Develop a customer presentation using a ‘live file’ which can be used with the customer </li></ul>
  5. 5. Agenda <ul><ul><li>A. Welcome and Introduction to Value Added Services </li></ul></ul><ul><ul><li>B. Review of the Key MYOB ProfitOptimiser features, functions and benefits </li></ul></ul><ul><ul><li>C. Using MYOB ProfitOptimiser in an accounting firm - How to identify key MYOB ProfitOptimiser clients </li></ul></ul><ul><ul><li> - How to explain MYOB ProfitOptimiser outcomes to clients in terms that they can understand </li></ul></ul><ul><ul><li>D. The MYOB ProfitOptimiser consultation process </li></ul></ul><ul><ul><li>E. Using MYOB ProfitOptimiser in the Banking sector </li></ul></ul><ul><ul><li>F. Your Customer - A case study and presentation </li></ul></ul>Gaining confidence with Dialogue
  6. 6. Expected Outcomes <ul><li>Employ a standard tool for financial analysis, interpretation and discussion across broad customer types </li></ul><ul><li>Obtain higher levels of confidence through customer communication </li></ul><ul><li>Understand and ensure the most efficient use of the Customer Dialogue process </li></ul><ul><li>Produce a higher quality, differentiated Customer Value Proposition </li></ul><ul><li>Enhancement of partnership between the Customer and their Bank </li></ul><ul><li>Establish your Practice as “a real alternative in our chosen markets” </li></ul>Building a better understanding of our clients
  7. 7. Introduction to Value Added Services
  8. 8. The Dilemma <ul><li>Profit margins are shrinking on Accounting and taxation work </li></ul><ul><li>Many Accountants are repositioning themselves by offering more profitable value added services like: </li></ul><ul><li>Strategic Planning </li></ul><ul><li>Business Valuations </li></ul><ul><li>Bank Submissions </li></ul><ul><li>Working Capital Management </li></ul><ul><li>Cash Flow Analysis </li></ul>COMPLIANCE vs VALUE ADD
  9. 9. Client Service Level Continuum Level 5 Level 4 Level 3 Level 2 Level 1 Profit and Loss Balance Sheet Statement of Cash Flow Analyse and educate clients about critical ratios Conduct What If scenarios Help client set strategy and direction through goal- setting & goal seeking Link financial goals with business activities Measure outcomes of business activities Monitor and help client strategically manage business activities Key Performance Indicators
  10. 10. Move from Compliance to Reliance Level 5 Level 4 Level 3 Level 2 Level 1 COMPLIANCE RELIANCE Technical Foundation Thorough Analysis Future Focus Link to Performance Continuous Improvement Collect Data Organise & Inform Analysis & Knowledge Applied Wisdom
  11. 11. Using MYOB ProfitOptimiser in an Accounting Firm
  12. 12. Stages of Accounting Collecting Recording Summarising Analysing
  13. 13. Working Capital % <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li></ul><ul><li>Days Receivable </li></ul><ul><li>Days Inventory </li></ul><ul><li>Days Payable </li></ul><ul><li>Impacts on cash flow </li></ul><ul><li>Low margin businesses are more likely to be under stress </li></ul><ul><li>Working Capital % must be less than the Gross Margin % </li></ul><ul><li>$37.20 of Working Capital is absorbed from each additional $100 of Sales </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : Gross Margin % </li></ul><ul><li>Sensitivity Analysis : 1% Change drivers </li></ul>Cash flow on incremental sales will decline as the working capital % approaches the gross margin % When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  14. 14. Gross Margin % <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>COGS </li></ul><ul><li>Operating measure before overheads </li></ul><ul><li>Before interest & tax </li></ul><ul><li>Return on Sales before overheads, interest & tax </li></ul><ul><li>$30 of gross operating profit is made per $100 of Sales </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : 1% change in Gross margin % </li></ul><ul><li>Sensitivity Analysis : 1% Change drivers </li></ul>Businesses with a low Gross Margin % are driven by price rather than volume When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  15. 15. Net Profitability <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>COGS </li></ul><ul><li>Overheads </li></ul><ul><li>(Volume is a driver when some </li></ul><ul><li>Overheads are fixed) </li></ul><ul><li>Operating measure </li></ul><ul><li>Before interest & tax </li></ul><ul><li>Net Operating Return on Sales </li></ul><ul><li>$4.72 of operating profit is made per $100 of Sales </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : 1% change in Net Profitability </li></ul><ul><li>Sensitivity Analysis : 1% Change drivers </li></ul>Operating profit should be measured before interest. Interest is a financing cost, not an operating cost. When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  16. 16. Interest Cover EBIT – Key Covenant Ratio <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li></ul><ul><li>COGS </li></ul><ul><li>Overheads </li></ul><ul><li>Other </li></ul><ul><li>Interest </li></ul><ul><li>EBIT capability to service interest </li></ul><ul><li>For every $1 of interest, there is $2.71 of EBIT to pay it </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : The required lending covenant </li></ul><ul><li>Sensitivity Analysis : 1% Change drivers </li></ul>The appropriate interest cover will depend on an assessment of the business risks of the customer When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  17. 17. Current Ratio <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Days Receivable </li></ul><ul><li>Days Inventory </li></ul><ul><li>Days Payable </li></ul><ul><li>For every $1 of Current Liabilities there is $2.19 of Current Assets to pay them </li></ul><ul><li>The current ratio should reflect an appropriate relationship between all three of the drivers </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : Rule of thumb - two times </li></ul><ul><li>Sensitivity Analysis : 1% Change drivers </li></ul>The Current Ratio covenant has been set for your business by taking the following factors into account… When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  18. 18. Activity <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li></ul><ul><li>Days Receivable </li></ul><ul><li>Days Inventory </li></ul><ul><li>Days Payable </li></ul><ul><li>Plant, Prop & Equip </li></ul><ul><li>Investments </li></ul><ul><li>Impacts on liquidity </li></ul><ul><li>Mix of Operating Working Capital and Non-Current Assets is important </li></ul><ul><li>Capital Turnover </li></ul><ul><li>$1.37 of Sales per $100 of Capital invested </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : Activity of 1.0 to commence analysis </li></ul><ul><li>Sensitivity Analysis : Change drivers </li></ul>Normally, manufacturers have a low activity ratio compared to retailers. What type of business does the customer have ? When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  19. 19. Total Liability/Equity <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Creditor days </li></ul><ul><li>Other current </li></ul><ul><li>Liabilities </li></ul><ul><li>Long Term Liabilities </li></ul><ul><li>Equity </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : to 1.5 </li></ul><ul><li>Sensitivity Analysis : Change drivers </li></ul>How much total liabilities a business has for every dollar of equity When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  20. 20. Equity to Total Assets <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Days Receivable </li></ul><ul><li>Days inventory </li></ul><ul><li>Equity </li></ul><ul><li>Non current assets </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : For example - 70% </li></ul><ul><li>Sensitivity Analysis : Change drivers </li></ul>How much total equity has the owner got if his assets as opposed to outside funding or creditors. Usually a low figure indicates that an owner is not in control of his own assets.. Also called Capital Adequacy When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  21. 21. Cash Flow <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Change in Net Assets </li></ul><ul><li>Change in Equity </li></ul><ul><li>A simple method for calculating the net cash flow movement for the period under review </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : A positive Cash Flow or Zero </li></ul><ul><li>Sensitivity Analysis : Not applicable </li></ul>Cash flow is calculated as the movement on the net change in debt for the period When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  22. 22. Debt to Equity <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Interest expense </li></ul><ul><li>Short/long term debt </li></ul><ul><li>Short/long term equity </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : For example 2 </li></ul><ul><li>Sensitivity Analysis : 1% Change drivers </li></ul>Measure relationship between the borrowed funds and the investment in the business by the owner When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  23. 23. ROCE % <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li></ul><ul><li>COGS </li></ul><ul><li>Overheads </li></ul><ul><li>Days Receivable </li></ul><ul><li>Days Inventory </li></ul><ul><li>Days Payable </li></ul><ul><li>Plant, Prop & Equip </li></ul><ul><li>Investments </li></ul><ul><li>$14.69 is returned for every $100 invested in Net Assets </li></ul><ul><li>ROCE % can be calculated as Profitability% multiplied by Activity </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : ROCE to desired % return </li></ul><ul><li>Sensitivity Analysis : Change drivers </li></ul>The ROCE % must at least be equal to the pre tax WACC When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  24. 24. Cash After Operations <ul><li>KEY ISSUES </li></ul><ul><li>Drivers : </li></ul><ul><li>Price </li></ul><ul><li>Volume </li></ul><ul><li>COGS </li></ul><ul><li>Overheads </li></ul><ul><li>Days Receivable </li></ul><ul><li>Days Inventory </li></ul><ul><li>Days Payable </li></ul><ul><li>Cash Flow at an EBIT level </li></ul><ul><li>Cash flow before any tax or interest expense or hard core debt repayment dividends and Capital expenditure </li></ul><ul><li>STRESS TESTING ACTIONS </li></ul><ul><li>Goal seek : Cash After Operations to at least meet tax, interest and dividend obligations </li></ul><ul><li>Sensitivity Analysis : Change drivers </li></ul>Should at least be positive to be able to meet interest, tax and dividend liabilities When Goal seeking solve by sensitivity. With sensitivity analysis review changes and undo before changing the next driver
  25. 25. The MYOB ProfitOptimiser Consultation Process
  26. 26. How Accountants can use MYOB ProfitOptimiser <ul><li>As a Bureau Service for clients to improve their financial performance and assist with finance applications. </li></ul><ul><li>By annualising and projecting financial data to the end of a specific reporting period (3,6 or 12 months). </li></ul><ul><li>The 3 key financial drivers are then interpreted and analysed: </li></ul><ul><ul><ul><li>Profitability </li></ul></ul></ul><ul><ul><ul><li>Cash Flow </li></ul></ul></ul><ul><ul><ul><li>Financial Growth </li></ul></ul></ul>
  27. 27. How Accountants can use MYOB ProfitOptimiser <ul><li>By working with clients to devise ‘What If’ scenarios to improve financial performance. </li></ul><ul><li>Goal Seeking is then performed to visualise future improvements. </li></ul><ul><li>Projections are then completed for future periods. </li></ul><ul><li>Anticipated profit and tax position is then assessed and profit and tax management initiatives are suggested. </li></ul><ul><li>The agreed performance measures are then documented for the client. </li></ul><ul><li>A follow up consultation is then arranged. </li></ul>
  28. 28. The Ideal Consultation – Part A <ul><li>Explain Loading screen </li></ul><ul><li>Explain Strategy screen (6 items max) </li></ul><ul><li>Display screen based pre analysis reports </li></ul><ul><ul><ul><li>Variance report </li></ul></ul></ul><ul><ul><ul><li>Working Capital Report </li></ul></ul></ul><ul><ul><ul><li>Cash Wastage report </li></ul></ul></ul>
  29. 29. The Ideal Consultation – Part B <ul><li>Perform What-If Analysis (2-3) </li></ul><ul><li>Undertake Goal Seeking (1 only) </li></ul><ul><li>Project budget for next period (roll forward) </li></ul><ul><li>Display screen based post analysis reports </li></ul><ul><ul><ul><li>Variance report </li></ul></ul></ul><ul><ul><ul><li>Working Capital Report </li></ul></ul></ul><ul><ul><ul><li>Cash Wastage report </li></ul></ul></ul>
  30. 30. The Ideal Consultation – Part C <ul><li>Provide Financial Diagnostic Report pre improvements </li></ul><ul><li>Organise next consultation with the intention of quarterly meetings </li></ul><ul><li>Post Financial Diagnostic Report (post improvements) within one week </li></ul>
  31. 31. Identify Strengths and Manage Issues The customer’s ability to service the loan <ul><li>Today’s debt is repaid from tomorrows cash flow – assumptions? (Capacity to service) </li></ul><ul><li>Cash Flow Quality </li></ul><ul><li>The need for debt and how it arises </li></ul><ul><li>Fast growth symptoms and consequences </li></ul><ul><li>Working capital per </li></ul><ul><li>$100 of sales </li></ul><ul><li>Cash flow/changing debt </li></ul><ul><li>Net cash income short term after debt obligation </li></ul><ul><li>Interest cover EBIT </li></ul><ul><li>Cash after operations </li></ul>Dialogue Opportunity
  32. 32. Identify Strengths and Manage Issues Identify issues, communicating the issues with the customer and working with the customer to minimise/mitigate those issues. <ul><li>Early warning indicators of credit deterioration – list… </li></ul><ul><li>Positive recognition of customers strong or improved performance </li></ul><ul><ul><li>Profitability </li></ul></ul><ul><ul><li>Cash Flow & Funding </li></ul></ul><ul><ul><li>Working Capital management </li></ul></ul><ul><ul><li>Non Current Assets </li></ul></ul><ul><li>Covenants and feedback procedures </li></ul><ul><li>Stress testing assumptions </li></ul><ul><li>Liabilities/Equities </li></ul><ul><li>Equities/Assets </li></ul><ul><li>Goal seeking </li></ul><ul><li>ROCE% </li></ul><ul><li>Interest Cover EBIT </li></ul><ul><li>Net Profitability % </li></ul>Dialogue Opportunity
  33. 33. Identify Strengths and Manage Issues Using covenants as a risk control mechanism <ul><li>Covenants should be used as early warning indicators for a review of risk </li></ul><ul><ul><li>“ Trigger to dig deeper” </li></ul></ul><ul><ul><li>If breeched use MYOB ProfitOptimiser to sensitize and understand “why” </li></ul></ul><ul><ul><li>What are the options to redress the breach? </li></ul></ul><ul><li>Covenants should be set at a level that will facilitate early detection of risk </li></ul><ul><ul><li>Use MYOB ProfitOptimiser to sensitize and stress test the business to assist in setting covenants at appropriate levels </li></ul></ul><ul><ul><li>Share with customers the reasons why covenants are set at a particular level </li></ul></ul><ul><ul><li>Use MYOB ProfitOptimiser to model the risks that the business may face if the covenants are breeched </li></ul></ul>Dialogue Opportunity
  34. 34. Identify Strengths and Manage Issues Short Term Liquidity <ul><li>Working Capital Management </li></ul><ul><li>The impact of fast growth </li></ul><ul><li>The drivers of operating working capital investment </li></ul><ul><li>Focus on Lead indicators </li></ul><ul><li>Cash Wastage </li></ul><ul><li>Working Capital </li></ul><ul><li>Separate Finance from operations </li></ul><ul><li>Goal seeking </li></ul><ul><li>Current Ratio </li></ul>Dialogue Opportunity
  35. 35. Identify Strengths and Manage Issues Long Term Solvency <ul><li>The Balance Sheet structure </li></ul><ul><li>Valuing the Net Assets </li></ul><ul><li>Cause and effect - a strategic approach </li></ul><ul><li>Focus on Lead Lag indicators </li></ul><ul><li>ROCE% </li></ul><ul><li>Valuation </li></ul><ul><li>Total Liabilities/Equity </li></ul><ul><li>Goal seeking </li></ul><ul><li>Equity/Total Assets </li></ul>Dialogue Opportunity
  36. 36. Identify Strengths and Manage Issues A Quick Business Diagnosis <ul><li>Is the Gross Margin % equal to or greater than that of similar businesses? </li></ul><ul><li>Is the Net Profitability % equal to or greater than that of similar businesses? </li></ul><ul><li>Is the Gross Margin % greater than the Working Capital % </li></ul><ul><li>Equity of total assets </li></ul><ul><li>Is the Interest Cover ratio within normal covenant levels or industry benchmarks </li></ul><ul><li>Drivers of ROCE% </li></ul><ul><li>Equity/Total Assets </li></ul><ul><li>Sensitivity analysis </li></ul><ul><li>Interest Cover </li></ul>Dialogue Opportunity
  37. 37. Lets do this together ! Successful customer = Successful practice <ul><li>Transparency - communicating credit requirements and decisions to customers/accountants </li></ul><ul><li>Financial performance - Annual reviews at very least </li></ul><ul><li>Who else do you need to build a partnership with? i.e. Accountant </li></ul><ul><li>Enable customers to see the benefits, cost savings & management efficiency </li></ul><ul><li>BBM coaching customers in the use of the tool </li></ul><ul><li>Present Data </li></ul><ul><li>Stress testing </li></ul><ul><li>Data Exchange </li></ul>Dialogue Opportunity
  38. 38. Financial Performance Assessment …Four Customer Perspectives Profitability Cash Flow & Funding Working Capital Management Non-Current Assets <ul><li>Price </li></ul><ul><li>Volume </li></ul><ul><li>COGS </li></ul><ul><li>Overheads </li></ul><ul><li>Interest Cover </li></ul><ul><li>Next $100 of sales </li></ul><ul><li>Working Capital % </li></ul><ul><li>Cash Wastage </li></ul><ul><li>Gross Cash Profit </li></ul><ul><li>Cash after Ops </li></ul><ul><li>Net Cash after Ops. </li></ul><ul><li>Net Cash Income </li></ul><ul><li>Change via debt </li></ul><ul><li>Current Ratio </li></ul><ul><li>Total liabilities/to equity </li></ul><ul><li>Equity to Total Assets </li></ul><ul><li>A/R Days </li></ul><ul><li>Inventory Days </li></ul><ul><li>A/P Days </li></ul><ul><li>Activity Ratio </li></ul><ul><li>Activity Ratio </li></ul><ul><li>ROCE% </li></ul><ul><li>Intangibles </li></ul>1 Strong Weak <ul><li>Market Growth </li></ul><ul><li>Market Share </li></ul><ul><li>Delivery/Reliability </li></ul><ul><li>Quality/Specifications </li></ul><ul><li>New Product Develop </li></ul><ul><li>New Market Develop </li></ul><ul><li>Customer Retention </li></ul><ul><li>Customer Growth </li></ul><ul><li>Longer Contracts </li></ul><ul><li>Product Costing </li></ul><ul><li>Marketing Strategy </li></ul><ul><li>Admin Costs </li></ul><ul><li>Employee Satisfaction </li></ul><ul><li>Teamwork </li></ul><ul><li>Productivity </li></ul><ul><li>Creativity </li></ul><ul><li>Foreign Exchange issues </li></ul><ul><li>Supplier Terms of payment </li></ul><ul><li>Customer Terms of Payment </li></ul><ul><li>Credit Policy </li></ul><ul><li>Credit Management Systems </li></ul><ul><li>Taxation Strategy </li></ul><ul><li>Funding Policy – NCA </li></ul><ul><li>Dividend Policy </li></ul><ul><li>Repayment of Equity Loans </li></ul><ul><li>Statutory obligations unpaid </li></ul><ul><li>Forecasting accuracy </li></ul><ul><li>Discounts - Suppliers </li></ul><ul><li>Obsolete stock </li></ul><ul><li>Inv. Management Sys. </li></ul><ul><li>A/R Management Sys. </li></ul><ul><li>A/P management Sys. </li></ul><ul><li>Drivers linked to MYOB ProfitOptimiser </li></ul><ul><li>Points for Discussion </li></ul><ul><li>Funding Policy </li></ul><ul><li>Valuation policy </li></ul><ul><li>Depreciation Policy </li></ul><ul><li>Unused Capacity </li></ul><ul><li>Intangibles </li></ul><ul><li>Investments </li></ul><ul><li>Excess cash </li></ul>2 3 4 1
  39. 39. MYOB ProfitOptimiser and the Banks Using MYOB ProfitOptimiser in the Banking Sector
  40. 40. MYOB ProfitOptimiser & Australian Banks
  41. 41. The Partnership Model Bank
  42. 42. Two perspectives of Financial Performance in the Dialogue Channel Non-Current Asset Management Financial performance and risk monitoring The Customer Perspective The Lender Perspective $ Transparency Working Capital Management Cash Flow Profitability Debt Service Capability
  43. 43. A Typical Loan Scenario Bank Reports Provided Numerous interpretive phone calls Paper based application submitted Client calls Bank to arrange loan Conditional Loan approved Accountant provides financial documentation
  44. 44. Case Studies Your Customer A Case Study and Presentation
  45. 45. MYOB ProfitOptimiser case study preparation <ul><li>Required preparation activities for participants… </li></ul><ul><li>Participation in MYOB ProfitOptimiser introductory training - you should have by now a sound understanding of the product navigation and use </li></ul><ul><li>Select one of your customers to use as a ‘case study’ within the training session – your post course activity requires that you present what you complete in the training session to this customer. Save to USB device or CD. </li></ul><ul><li>• In preparation for this case study think about any financial ‘issues’ facing this customer (e.g. working capital management), and what might then be relevant to your customer for analysis in MYOB ProfitOptimiser. </li></ul><ul><li>For this selected customer, bring their most recent two consecutive financial periods as an MYOB ProfitOptimiser model to the course – saved on a USB device or CD. </li></ul><ul><li>Bring any other customer detail (or market details) which may assist with this analysis to be performed on your customer. </li></ul>
  46. 46. Your customer - A case study and presentation <ul><li>Required ... </li></ul><ul><li>Load your customer case study into MYOB ProfitOptimiser from your USB device or CD and using the structured approach to commencing a dialogue, prepare for your customer presentation. When preparing for your presentation remember to make sure that you: </li></ul><ul><ul><li>Explain the benefits </li></ul></ul><ul><ul><li>Cover the key issues </li></ul></ul><ul><ul><li>Highlight the advantages of a proactive approach </li></ul></ul><ul><li>One or two participants will be selected to present their findings to the group who will be asked to provide constructive feedback from the client’s perspective. </li></ul><ul><li>In your analysis focus upon the following </li></ul><ul><ul><li>Profitability </li></ul></ul><ul><ul><li>Cash Flow & Funding </li></ul></ul><ul><ul><li>Working Capital Management </li></ul></ul><ul><ul><li>Non-Current Asset Efficiency </li></ul></ul>
  47. 47. Questions and Answers
  48. 48. Thank You

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