PRIORA® BUSINESS FEATURES EXTENDED:
- Main Menu The Main Menu is the center of the system showing the components of the Priora® Business. Each of the 12 months of the year are shown in the right half of this image. The Introduction contains instructions, definitions and a place to set the current Fiscal Year for the report.
- 12-Month Budget Planner The 12-Month Budget Planner represents the revenues (top rows totaled in Row 4) less the cash expenses totaled on Row 6, leaving the cash remaining at the end of the month (Row 7). Notice Rows 8 through 13 include the key ratios that drive the measurement of cash flow. Section 14 includes balance sheet information necessary to calculate these ratios. Data can only be entered in yellow cells in Priora® Business. Data in the white cells is either calculated there or transferred from another location. Notice the “Detail” button on many of the rows. When completing the 12-Month Budget Planner, the business owner should begin with the costs first, then move to the revenues. The process of completing a successful budget requires moving back and forth between the Revenues and the Costs many times. It is best to begin with our Costs, since we tend to be more conservative when spending our money.
- Purchases Screen The Purchases (Merchandise) screen is an image of one of the “Detail” pages when the “Detail” button is clicked. It is here, in the upper portion, the budgeted amounts are entered for each month of the year. The lower portion is where the ‘actual’ data is entered from the accounting system being used by the business. The most important part of any budget is the center box called “Assumptions.” It is in this box the owner will note the reasoning for why the numbers being used are entered into the system. This “thinking” behind the numbers is very helpful to the management team/owner throughout the year. When the ‘budget’ amount is dramatically different from the ‘actual’ amount in any month, the reason for the variance should be noted in this “Assumptions” area.
- Accounts Receivable Data Flow The Accounts Receivable Data Flow is very important because it determines the rate at which the accounts receivable will be collected. The instructions for this page are detailed and easy to follow. Each quadrant in this image has a button to a corresponding page in Priora® Business to budget and manage the generation of and collection of accounts receivable.
- Accounts Receivable Budget Configuration Schedule Accounts Receivable Budget Configuration Schedule is where the A/R data comes together and the aging of accounts receivable is estimated, based on the actual experience of the borrower. The percentages collected can be modified during the year, for the remaining portion of the year.
- Debt Management Summary The Debt Management Summary page is a powerful tool to manage an unlimited number of debts (hopefully you don’t have that many debts). On this page is an Amortization Calculator that will determine the monthly payment based on either a 360 day or 365 day year. The calculator provides the ability to solve for any of the four components in a debt – the principal, the term, the interest rate or the monthly payment. The Debt Management Summary also assigns the total interest and total principal amounts to the Budget Page automatically to illustrate the impact of debt on the cash flow of the business. Finally, the Debt Management Summary will illustrate the full amortization for each of the eight loans in the schedule for up to 480 months, if necessary.
- Amortization Schedule The Amortization Schedule includes an analysis of the total cost of a loan based on the terms of that loan. This page is very useful in determining the best payment plan that can comfortably be supported by the cash flow of the business. It provides the owner of the business with an understanding of how to reduce the total cost of any one or several loans the business is or is projected to carry.
- Debt Consolidation Calculator The Debt Consolidation Calculator is a very powerful debt management system. It permits the owner of the business to combine an unlimited number of loans into one loan (four notes are combined into one note), using two methods. The first method is to calculate the weighted average interest rate for all loans, solving for a new amortization of the outstanding balance of all debt. The second method, and often the most beneficial, is to weight averaging the interest rate AND the remaining amortization terms into one loan. This solves for a new monthly payment, reducing the monthly payment, improving the cash flow of the borrower to fund growth opportunities. This is a required exercise, since there is no right method for every situation. Business owners are often amazed at the options they have available to them and are grateful for having gone through this exercise. Finally, a weighted average interest rate is the same cost to the business and the same income to the lender as having four individual rates, one for each of the four individual notes.
- Fixed-Variable Expense Sorter The Fixed-Variable Expense Sorter is the first step to determining how many units must be sold at what price to make what profit? This is a snapshot of the monthly costs as developed in the 12-Month Budget page. On this page the business owner defines the cost as a Fixed Cost (a cost that must be paid whether any sales occur or not) or a Variable Cost (a cost that occurs in direct proportion to the amount of sales). As the business owner develops his/her business plan using Priora® Business, they will move back and forth between this page and the 12-Month Budget page as they refine the costs of the business.
- Break-Even Analysis Summary The Break-Even Analysis Summary page shows the Variable Cost and Fixed Cost percentages. This is very important as the Fixed Cost percentage, combined with the desired Profit, constitutes the Contribution Margin (will be seen on the Break-Even Illustration page). Note that on this page the business owner defines his/her desired profit for the month. This then drives the number of units required to achieve that profit and the sales required to achieve that profit. With this information the business owner can now develop an effective marketing strategy and plan to achieve those required sales. On this page, a line title Weighted Average Unit Sales Price is the basis for determining how many units must be sold, based on that weighted average.
- Unit Calculator The Unit Calculator page is where the Weighted Average Unit Sales Price is determined. Note that it will consider 35 items, categories, departments, etc. Note also that this is not only a budget item, but the actual data can be entered each month to show how Actual sales compared to the Budgeted sales. This page will also be visited often as the business owner determines the proper pricing to not only generate the desired profit, but to do this an remain competitive.
- Break-Even Illustration The Break-Even Illustration page is perhaps the most educational page in the system. It clearly illustrates the impact of Fixed and Variable Costs on the profitability (really, the Cash Flow) of the business. On this page, the Variable Cost Percentage shown in the Variable Costs box is a constant figure. It will not change unless the owner changes costs in the Budget. The Fixed Costs box also contains a Fixed Cost Percentage. But the more important figure in this box is the dollar amount. After all, the dollar amount is Fixed. The percentage can change if breakeven sales are exceeded. It is only when break-even sales are exceeded that a profit can occur. This page illustrates this concept very effectively.
- Monthly Cash Flow Ledger A very valuable report for both the business owner and the lender. The Monthly Cash Flow Ledger is generated by Priora® Business when the data in the Actual column for the Month is entered from the business accounting system – manually by the owner. This page prints on one 8.5 x 11 page of paper. Down to Row 7, it presents five columns – Budget, Actual, Variances (each includes month and year-to-date), the Monthly Impact Over the Remainder of the Year, and the Fiscal Year Budget. A lot of information is contained on this page. For example, follow the information shown on Row 5 (a), Purchases. After two months (this is the February report) we budgeted to spend $80,225 for the month, but we spent $81,000. Our Monthly Variance for the month was ($775). For the two months, we Budgeted to spend $160,450 and Actually spent $162,000 resulting in a YTD Variance of ($1,550) for the first two months. The “Impact” of this Year-to-Date variance is ($155). This means we have to ‘make up’ $155 for each of the next 10 months remaining in the year to still hit our Budgeted amount for the year of $962,700. In the month of March we divide the YTD Variance by the 9 remaining months in the year. In April by the 8 remaining months in the year. Each month the business owner can see the dollar impact of the YTD Variance, whether it is a positive or negative Variance. Knowing the dollar impact of the YTD Variance is more valuable than being told the Variance is a percentage of the Budget. Percentages are not as valuable and meaningful as the dollar amount.
Below row 7 are some critical loan analysis information. Following are the critical ratios cited for the Month:
- Working Capital – Row 8
- Debt Service Coverage Ratio – Row 9
- Leverage Ratio – Row 10
- Borrower’s Certificate – Row 11 (Useful for those with working capital lines of credit).
- Current Ratio – Row 12
- Quick Ratio – Row 13
Section 14 contains balance sheet information to calculate these ratios. In addition, notice the TIP buttons on rows 7, 11, and 14. Such buttons are found throughout the Priora® Business system to explain how ratios are calculated and how they are applied.
- Leverage Ratio Graphs Priora® Business produces nine graphs to illustrate key ratio performances. Accumulating monthly, these graphs will illustrate “Actual Cash Position”; “Total Cash Receipts”; “Total Cash Paid Out”; “Working Capital Position”; “Quick Ratio”; “Current Ratio”; “Line of Credit Summary”; “Leverage Ratio”; and “Debt Service Coverage Ratio.” Illustrated here is the graph illustrating the “Leverage Ratio.” The red line indicates the limit not to exceed, set by the business owner. Both the projected and actual leverage ratios can be illustrated. Very powerful report.
- 12-Month Actual Ratio Summary The 12-Month Actual Ratio Summary is a ‘dashboard’ of all the key ratios. The “I” buttons contain definitions of each ratio and an explanation of how they are applied. Having these key ratios on one page presents the user with the ability to determine how the business is truly performing. One must learn how to read and evaluate these ratios. More importantly, the business owner is now able to correlate his/her business decisions with the results of those decisions as seen in the ratios. When the business owners knows how his decisions will drive these ratios, the opportunity for success is much improved.
- Sources and Uses of Funds statement The Sources and Uses of Funds statement is critical in informing the lender how much money is required for the project. It breaks down the amount of money the borrower will inject as equity in the project and illustrates how much money is to be borrowed. This report also illustrates where the funding for each us is coming from. Very powerful tool when used by the business owner to articulate for the lender the financial details of any project.