Preface............................................................................................... 7
Acknowledgements.......................................................................... 11
Introduction....................................................................................... 12
Commercial Awareness................................................................... 15
Financial Statements........................................................................ 17
Financial Governance...................................................................... 17
Accounting Principles...................................................................... 18
3 Key Financial Statements............................................................. 19
Income Statement............................................................................. 20
What goes into an Income Statement and what does the
different profit lines tell us?.......................................................24
Balance Sheet................................................................................... 28
Sections of the Balance Sheet................................................ 30
Cash Flow.......................................................................................... 40
How to manage the Cash Flow................................................ 42
Financial Information Building Blocks........................................... 44
Supplier Cost.................................................................................... 45
Staff Cost........................................................................................... 46
Freelancers.............................................................................. 46
Permanent Staff....................................................................... 47
Timesheet.......................................................................................... 48
Why do we need to track time?............................................... 49
What are the arguments against the use of time capturing?... 52
Responsible implementation and use of time tracking............ 53
Typical information captured within a timesheet...................... 55
Timesheets in Business Operations........................................ 55
Rate Card........................................................................................... 58
What are Rate Cards used for?............................................... 58
What information does a rate card provide?............................ 59
How do you compile a Rate Card – A Methodology?.............. 60
Financial Performance Measurement............................................. 72
Ratios and Key Performance Indicators (KPIs)............................. 72
What is a Ratio?...................................................................... 74
What is KPIs?.......................................................................... 74
How to compile a KPI?............................................................ 75
Why use KPIs and Ratios?...................................................... 75
Leading and Lagging Indicators?............................................. 77
Useful Ratios..................................................................................... 78
Profitability Ratios/KPIs............................................................ 78
Liquidity Ratios......................................................................... 86
Debt or Leverage Ratios........................................................... 90
Operational Efficiency Ratios.................................................... 94
Project Efficiency Ratios........................................................... 96
Resource Management Ratio....................................................99
Sales Ratios.............................................................................102
Shareholder and Investor related Ratios..................................103
Commercial Market Awareness....................................................... 106
Understanding the Marketplace and Customer.............................. 106
Target market............................................................................ 107
Three types of markets..............................................................107
Define the Customer’s need for your product/service................108
Market Segmentation................................................................ 108
How do you go about segmenting your market place?............. 109
Frequently Repeat the Market Analysis.................................... 110
Understanding the Competition....................................................... 111
Gathering information about the competition............................ 111
Ask these questions to better understand your competition..... 112
Draw up a Competitors Table.................................................... 113
Net -Promoter Score (NPS)....................................................... 115
Frequently Repeat the Competitor Analysis.............................. 116
Financial Planning.............................................................................. 117
Why do we need to do Financial Planning?..................................... 117
Strategic Planning Process............................................................... 119
Actions in compiling a Strategic Plan........................................ 119
Budgeting Process............................................................................. 124
STAGE 1: Compile the Wish Lis................................................ 124
STAGE 2: Compile the Technology Strategic Plan.................... 126
STAGE 3: Compile the Technology Budget............................... 127
STAGE 4: Review and Approval................................................ 129
Forecasting during the financial year............................................... 129
Financials in Practice......................................................................... 131
Using Financial Statements to make decisions.............................. 132
Interpreting the Income Statement............................................ 132
Interpreting the Balance Sheet.................................................. 143
Interpreting the Cash Flow......................................................... 148
Financial Reconciliation............................................................. 151
Abbreviations (WIP)........................................................................... 152
Definitions (WIP)................................................................................ 155
References.......................................................................................... 159
About the Author................................................................................ 161
Bio....................................................................................................... 161
Renier’s career story in His Own Words......................................... 162
Appendixes (WIP).............................................................................. 168
COPYRIGHT........................................................................................ 170