“The business has a new owner, or I have just taken over finance. The board and the lenders want a budget, cash week by week and a five-year plan they can hold us to.”

A new owner, a carve-out or a new finance director starts a clock. Within 100 days the board and the lenders want to know what the business really earns, a budget they can hold it to, cash week by week and a five-year plan the board will sign. Meanwhile the history sits in a former owner's systems or in spreadsheets nobody new has seen, and the finance team is already stretched.

What usually goes wrong

  • The history sits in the former parent's systems, cut and allocated its way, so nobody can say what the business earned on its own
  • Margin has never been measured customer by customer after every term and the cost of serving them, so the new owners are backing growth on gross sales
  • The thirteen-week cash forecast is a spreadsheet rebuilt every Monday, and nobody checks last week's forecast against the bank
  • Transition-service charges and the one-off costs of standing alone reach the cash forecast when their first invoice does
  • The budget, the cash forecast and the five-year plan are three models, so the lenders and the board hear three different stories
  • The five-year plan was written for the deal, and nobody can say what next year's budget must deliver to stay on it

It suits any goods business with a new owner or a new finance director, or one just carved out of a larger group: manufacturers, brand owners, distributors and wholesalers. It goes furthest where the S&OP plan is built too, because the budget and the cash forecast then start from the signed plan.

How the software answers it

  1. Weeks one to three: what the business really earns. Margin by customer and product after every discount, rebate and piece of trade spend, and after the cost of delivering and marketing to each customer, from the business's own sales history. The customers whose terms cost more than they bring in are ranked by the profit at risk.
  2. Weeks four to eight: the budget, and cash week by week. A budget that starts from the signed S&OP plan, with the P&L, balance sheet and cash flow held together before anyone signs. Beside it, a thirteen-week cash forecast by company and bank account: customer invoices dated by how each customer really pays, supplier invoices by due date, payroll, tax, capital projects and loan repayments from the plans, and transition-service charges and separation costs on lines of their own.
  3. Test what you would do. Delay chosen supplier payments, chase chosen customers, defer a capital project or draw on a bank facility, and see the effect week by week. A downside, with sales lower and customers paying later, shows how much headroom would be left.
  4. Weeks nine to twelve: the five-year plan. Several years of P&L, balance sheet and cash flow in downside, base and upside scenarios, frozen once the board signs, with a value for each scenario by discounted cash flow. The budget is then measured against the plan's first year, figure by figure.
  5. Every Monday: last week against the forecast. Last week's receipts and payments against what was forecast, line by line, and the forecast's accuracy over time. The window moves on a week and each week's forecast is locked, so the one the lenders saw can always be shown.

Headroom, cash plus undrawn committed facilities, is set against the minimum each company must hold, and any week below it is flagged. Payments between your own companies show in each company and drop out of the group total. The weekly cash adds up to the monthly cash flow with every timing difference shown, so the cash view and the three statements always agree, and the forecast goes to the lenders as an Excel workbook with live formulas.

A worked example on illustrative figures: a carve-out's first 100 days

What we build for it

Examples from software we have already built:

  • An acquired company in the group's statements from the month control passes, with its goodwill, the fair-value step-up and any earn-out
  • Group statements that remove sales and balances between your own companies, in every currency the group uses
  • Debt and leases with their repayments in the plan, and extra financing drawn in any month cash would fall below the minimum
  • Operating costs by cost centre and people position by position, so the cost of standing alone is planned before it arrives
  • The assumption that moves profit most, and the volume or price move that reaches a target profit
  • Board reporting, for example a monthly pack in PowerPoint or PDF

All the sample screens

Screens

“Where did sales and profit grow, by category, brand, customer or market, and where did the margin slip?” Illustrative data.
“Which brands raised their prices, and which customers get deep discounts for a thin margin?” Illustrative data.
“What will the volume plan earn, month by month, once each customer's discounts and rebates come off?” Illustrative data.
“Does the assembled budget reach its targets, and do the balance sheet and cash flow tie before anyone signs?” Illustrative data.
“How does next year's budget compare with this year, line by line, and why did each line move?” Illustrative data.
“Where is cash tightest over the next thirteen weeks, and does any week fall below the minimum we must hold?” Illustrative data.
“Does the five-year plan pay for itself, and how do its statements follow on from the last two years' actuals?” Illustrative data.
“What is the company worth on this plan, and how much does that depend on the discount rate and long-term growth?” Illustrative data.

Where to start

It starts with a paid pilot, usually what each customer and product really earns, on the business's own sales history, then a build at a fixed fee with its timetable set in the scope, and an annual subscription.

Prices How an engagement runs

Write to us

Tell us your business need, or ask for a worked example on your figures — we want to hear it.

Or email support@mistlight.eu

Executive overview screen, on illustrative data

What changed against last year, and where did the growth and the drag come from? — Illustrative data.