Spring was in the air when we reached the modern business director Matti Markkanen from the Balanco office in Aviapolis, close to Helsinki-Vantaa Airport, on a sunny Friday afternoon in April. Balanco serves its Customers with about 100 Financial Advisors both in Finland and Sweden.
Balanco’s Financial Advisors work with CEOs and decision makers for building scenarios, analysing financial status and predicting future money flow. In addition to the financial consulting, Balanco prepares business scenarios with Customers and helps to select the right KPIs and to predict future money flow. In their daily life, Balanco’s Financial Advisors analyse large amounts of data. As they have many companies with different business models to analyse, Financial Advisors save time using machine learning to predict future money flow. “For making decisions, our Customers need data not only from the accounting software: we use for example also CRM and HR software as data sources.” Matti tells us. The War is toning up the conversation with the decision makers right now “The situation in Ukraine is toning up the conversation with the Customers right now.” Matti says “Balanco works especially with the decision makers of growth companies who are looking for new markets.”
“A crisis, like the War in Ukraine or the C-19 pandemic, which comes out of the corner, affects also those established businesses who have been in the market for a long time.” Matti says.
“The rise in energy prices and labour shortages will flow indirectly into almost everything now as freight, logistics, production and the other costs rise. In addition, the availability of steel, aluminium, glass and timber has declined and prices have risen.” Future insights is now the number one priority to the decision makers “The full effects of sanctions are seen with a delay. Many of our Customers have now filled up their inventories due to rising raw material prices, component shortages and logistical disruptions.” Matti tells us “With our Customers, we are preparing for the future with three alternative business scenarios: positive, neutral and negative, which take into account the impact of price increases to the sales and profits.” Balanco’s Financial Advisors are predicting the future’s cash flow and business scenarios both in the short and long term.
“As a tactical tool, a short-term forecast, we use an effortless 90-day money flow forecast that predicts the daily cash position, shows the confidence interval and relevant data on how the cash situation looks like in the coming months and how companies will pay their invoices.” Matti says.
“As a strategic tool, a long-term business forecast, we plan a monthly forecast for the next 1 –3 years based on the income statement, balance sheet and business indicators. The strategic forecast is needed when we plan investments, recruitments and funding of operations.” Matti explains. Balanco helps the decision makers to predict the future money flow “After the crises of the 2020s, it is no longer enough for our Customers to have timely booking, monthly reporting or taxation in control. On top of that, we think that as a basic service, the decision makers must be able to predict and to be prepared for the future.” says Matti.
“We have regular status updates with standard agenda. We review what metrics the Customer should monitor and help to determine the target level. The most important KPIs to follow are revenue and growth, operating profit and equity ratio, and short-term money flow.” There has been a lot of talk about stagflation recently: what concrete advice you are giving to a decision maker who would like to keep money flow in control during the turbulence? “It is good to be prepared for different future scenarios. Most likely, we see higher interest rates during the next months and years. The war in Ukraine and the associated sanctions can create stagnation in the economy. In the scenario work, it is worth taking into account rising energy prices, higher interest rates and loan repayments. If you do business abroad, it's good to be prepared for the FX market volatility and consider for example FX hedges.” Matti instructs.
In the 2020 economic crisis, decision makers have been forced to make difficult decisions around resource allocation and cash flow planning. At the same time, the role of Balanco’s Financial Advisors has become highly strategic. The environment is changing rapidly right now. If you need to make better decisions faster, we’d love to serve you - fast.
Contact Matti if you need an experienced Financial Advisor as a strategic partner.
Balanco is an accounting firm whose operations are based on understanding its customers and supporting their businesses. Balanco's offices are located in Vantaa, Helsinki, Oulu and Lahti. Swedish offices are located in Stockholm, Sollentuna, Södertälje and Visby.
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