Customer Interview: Gregg Moore, CEO Workplace Integra

The thing I love about Gregg Moore is his enthusiasm for what he does.  As he says,  “I’m a blessed man.  I get to get up and go to work every day and do something I thoroughly enjoy doing.” 

That’s not the only thing we share in common.  Gregg also feels like it is critical for him to systematically analyze his financial performance and manage his cash flow.  Kelly “sat down” with Gregg via telephone a few weeks ago to get his perspective on running a small business, and where SurvivalWare fits in.

Ms. Kelly Luhring:  So, why don’t you tell us about your company and your specific role in the company?

Mr. Gregg Moore:  Sure.  Well, I’m the President of a company called Workplace Integra, and we deal with occupational safety and health.  We provide onsite consulting, mostly in the area of occupational hearing conservation, but some other areas as well. 

And we also provide this really nice software package called Workplace Applications, which is used primarily by occupational health nurses and people responsible for safety in manufacturing environments.  So, that’s pretty much what we do. 

I guess the company has been around in its present form since the year 2000, although several of us in the company were with a predecessor company that actually went back to the early 1980s.  So, we’ve all been doing this stuff a long time and just love it.  I tell people I am a–I’m a blessed man.  I get to get up and go to work every day and do something I thoroughly enjoy doing.

Ms. Kelly Luhring:  And so, what kind of got you started with this?  What other industries do you maybe have experience in? 

Mr. Gregg Moore:  Oh, sure.  Well, my training is an audiologist.  I have a master’s degree in audiology from the University of North Carolina Chapel Hill.  I graduated in 1988, and from there went into the United States Army and was an Army officer.  And about half of the job of an Army officer is hearing conservation, because the Army has some very loud toys and hearing loss is a big deal in the military. 

So, that’s kind of where I got my start in hearing conservation, and just liked it so much that decided to try to make a career out of it.  And that’s pretty much been the great majority of my career since graduating, oh, gosh, how many years ago has it been?  You know, 1988, a nice long time that I’ve been doing this.

Ms. Kelly Luhring:  Okay.

And so, for example, what would be a safety measure precaution that you would advise a company to take that would kind of help with hearing conservation? 

Mr. Gregg Moore:  Ah.  Well, it all starts with a good thorough noise survey, that is, we actually go out and measure how much noise there is in the environment and how much of that workers are actually exposed to.  And then, based upon that, we make certain recommendations. 

Now, there’s this thing called the OSHA Noise Exposure Standard which all manufacturing companies have to comply with if their noise levels are above a certain amount.  And so, we help companies to comply with those requirements, but also to go really well beyond them, particularly in the area of hearing protection, that is, the actual wearing of earplugs and earmuffs.  And training is extremely important.

So, we help companies to develop really effective hearing conservation programs that will go well beyond just the sort of minimal regulations that you have to comply with. 

Ms. Kelly Luhring:  Okay. 

And so, you said the majority of your customers are the big manufacturing plants that have a lot of noise. 

Mr. Gregg Moore:  Oh, yes.

Ms. Kelly Luhring:  Do you have smaller customers as well?

Mr. Gregg Moore:  Um-hmm, we do.  Gosh, I guess the customer size ranges anywhere from very small companies with maybe only about 40, 50 people up to companies with–you know, multistate type companies, really multinational companies, with tens of thousands of employees.  So–.

Ms. Kelly Luhring:  –Okay–.

Mr. Gregg Moore:  –It’s a very wide spectrum that we cover. 

And geographically–of course, the vast majority of our customers are in the continental United States.  But, we also have clients as far away as Hawaii and American Samoa, and actually went to Saudi Arabia last year.  You know, very far-flung. 

Ms. Kelly Luhring:  Um-hmm.  Okay. 

And then, how did you find out about SurvivalWare?  And what made you decide to buy it? 

Mr. Gregg Moore:  Well, I initially found out about SurvivalWare through Philip Campbell. 

I had–well, going back a step, I earned my master’s degree in business administration, my MBA, a good many years ago in the early ’90s.  And I remember, you know, going through the accounting classes and really struggling with the cash flow, you know, statement.  It really didn’t make a whole lot of sense to me at the time.  I understood what it was for and sort of basically how to do it, but it never really made much intuitive sense to me.

Well, you know, all these years later and I’m out here running my own business and here I am having to deal with cash flow issues again.  And I was using a–of course, our company uses Peachtree, you know, to do our books, but I really did not like the cash flow piece of it.  You know, it was kind of your basic accounting model cash flow statement.

So, I was out there searching for something that would help me do things more intuitively.  And I just sort of stumbled, really, upon Phillip Campbell and upon his book on cash flow principles, and that really intrigued me.  And so, I read the book.  I talked with Philip.  And that’s when I really learned about SurvivalWare, was through him.  But, very quickly after that I purchased the software, and Philip was quite instrumental in helping me get things set up.

He did a lot of legwork to get the program set up to where I could use it.  And have thoroughly enjoyed it since then, I can tell you that.

Ms. Kelly Luhring:  And so, besides Peachtree, have you used any other kinds of accounting software in the past?

Mr. Gregg Moore:  Yes.  When I had a much smaller private practice, I used QuickBooks.  And for my own personal use, I use Quicken software. 

Ms. Kelly Luhring:  Okay.

And then, you said that you were looking to find a program that could help you analyze your cash flow more intuitively.  Do you care–?

Mr. Gregg Moore:  –That’s right–.

Ms. Kelly Luhring:  –To elaborate on that?

Mr. Gregg Moore:  Well, of course Philip, you know, developed this peace of mind cash flow model, and that made a lot of sense.  And, you know, of course there were two ways that I could go about trying to implement that peace of mind model, which is a more intuitive way of looking at cash flow.  One was I could sit down and try to do it on a spreadsheet.  And, you know, that I can do but, of course, it’s extremely labor intensive. 

But, then the other is to go out and buy somebody’s software that already had that model built into it.  And fortunately, SurvivalWare did.  And so, that’s really what led me to purchase this particular software package was because it already incorporated that peace of mind cash flow model in it.

Ms. Kelly Luhring:  Okay.

And how important is it for you as the President of your company to keep track of your cash flow?

Mr. Gregg Moore:  Oh, extremely.  We are a small consulting firm, about one and a half million in sales.  And in just sort of the nature of consulting, you really have to watch the cash because it’s a little unpredictable, you know, what’s going to come in from month to month. 

So, we really have to be careful not to overspend and to make sure that we have adequate cash flow to meet our needs on a month-to-month basis.  Yeah, critical.

Ms. Kelly Luhring:  Um-hmm.  Um-hmm.

And what is your user experience with Excel and what are some of its limitations? 

Mr. Gregg Moore:  Well, I like Excel tremendously, and probably would be considered a power user of Excel.  But, you know, there are limitations with its graphing capability.  Virtual anything you do in it, you have to manually set up.  If there are minor changes, then you might have to go back and make those changes across lots of different spreadsheets. 

You know, it can be a real pain to use if you’re doing really complex things like looking at data over a long time period.  And you can think of these monthly imports coming in from Peachtree, if you will, you know, profit and loss statements and balance sheets.  You know, those things really add up over years and year and years.  And it can be a bit difficult to go back and make a change and have that change carry back into all those various columns, if you will.

Well, the way Rusty has set up SurvivalWare, gosh, it’s just so much easier to implement even minor changes.  And, you know, you do it and you go on.  It’s extremely quick and simple to do, much easier to do than dealing with Excel. 

Ms. Kelly Luhring:  Okay.

And so, was it easy to learn how to use SurvivalWare? 

Mr. Gregg Moore:  Pretty easy, yeah.  The software’s quite intuitive.  You know, I probably don’t use it to its fullest potential.  I use it for what I need to use it for.  It will certainly do a good bit more than what I need it for, and I probably need to sit down with it, particularly with the new version coming out. 

But, yeah, it’s–it was easy to set up, very easy to use, and I think you’ll get out of it just as much you put into it. 

Ms. Kelly Luhring:  Um-hmm. 

And so, how often do you use it? 

Mr. Gregg Moore:  Oh, gosh.  Hmm.  At least monthly, because usually I’m importing data on a monthly basis.  You know, for instance, when April is done, about a week or so thereafter, I’ll import the profit and loss and the balance sheets from Peachtree, and that’s when I look at it.  And then, I may come back to it, you know, two or three times over the course of the month just if I want to look at something in particular.

So–.

Ms. Kelly Luhring:  –Um-hmm–.

Mr. Gregg Moore:  –At least on a monthly basis. 

Ms. Kelly Luhring:  How long have you been using it?

Mr. Gregg Moore:  I think, what, three years now?  Yeah, three years.

Ms. Kelly Luhring:  Great. 

And were you able to learn how to use it on your own, or with help from Learning SurvivalWare?

Mr. Gregg Moore:  Actually, Philip.  When all this was set up, I paid Philip to do a little consulting work with me and he showed me some things.  But, of course, I had already kind of dived into it. 

So, it did not take long to pick it up at all.  Although I will say that if you can get at Philip or Rusty or, you know, just somebody to kind of help out right at the beginning, I think the learning curve is greatly reduced by having somebody kind of walk you through a few things who has done it and who knows that software well. 

Ms. Kelly Luhring:  Um-hmm.  Of course.

Mr. Gregg Moore:  I–.

Ms. Kelly Luhring:  –And–.

Mr. Gregg Moore:  –Know that in our own company–and, of course, we are software producers as well.  We generally just don’t let that software out the door at all unless the client commits to some pretty extensive training, because otherwise we’re setting them up for failure. 

Ms. Kelly Luhring:  Um-hmm.  Okay.

How easy is it to load data and do projections?

Mr. Gregg Moore:  It was a bit of a struggle at first to learn how to load the data.  But, I think that’s mostly because there’s no kind of direct import into SurvivalWare from Peachtree.  So, it took Philip a little while to figure out how to do that.

But, once that was done, then from that point it was a piece of cake.  I mean, I can do it–you know, it takes all of about three minutes these days.  And I can’t remember the last time that I had a problem with it.  So, it’s a very smooth process once it was worked out.

It’s probably a lot easier coming from QuickBooks than it is from Peachtree.

Ms. Kelly Luhring:  Um-hmm.

And what do you like best about SurvivalWare? 

Mr. Gregg Moore:  What I like best about it, its ease of use, certainly that peace of mind cash flow analysis that’s built into it. 

I like the fact, too, that Rusty’s very responsive.  If there’s an issue, you’re not sure about something, you know, you pick up the phone, you send an e-mail in, you’re pretty much going to get him.  And I have found him to just be very, very responsive to my needs and concerns.  And I’m not even close to being his largest client, by any means.  I’m a pretty, you know, small potato in that field. 

Ms. Kelly Luhring:  Okay.

And have you seen the new version?

Mr. Gregg Moore:  Yes, I have, and it’s sitting on my computer.  And actually went through a little webinar yesterday with Rusty, and I like it.  It looks to be some pretty significant improvements.

The neat thing I like about the software–and, you know, of course it’s designed for really a small company like myself.  But then, you know, it can also be really scaled up to really, really big companies with people who will take the time to start customizing it. 

And I think that’s one of the things that I saw on the webinar yesterday is that it’s actually far more customizable than I though that it was.  And if somebody’s willing to take the time to sit down and learn how to do it, that’s an extremely powerful feature in that software. 

Ms. Kelly Luhring:  Yes.  I saw that, too. 

And so, another good thing is you’re able to save your customization so that once you have set it up for, you know, the first go-round, you can come back to it and use that same model to do what you need every month following. 

Mr. Gregg Moore:  Yes, it is very powerful. 

Ms. Kelly Luhring:  And so, what could you not do without  SurvivalWare that you can do now? 

Mr. Gregg Moore:  Well, probably nothing.  I mean, you know, most everything that it does I could do, but I would have to take the time to sit down and really sink a lot of effort into developing spreadsheets, and then, you know, try to keep the graphs up to date.  I think I could probably do just about everything with spreadsheets that I do with SurvivalWare, but the time savings, you know, and just not having to sit down and actually design all that stuff and support it, that’s what makes it attractive to me. 

It’s pretty–it’s an off the shelf software package that was easily customized to my needs.  And basically, all I have to do is just push a button and it does its thing.  It just saves me an awful lot of time and therefore money and headache involved in doing it another way.

Ms. Kelly Luhring:  If you were to estimate a percentage how much time you think it saves you within a month, what would you say?

Mr. Gregg Moore:  Oh, gosh.  It’s probably reduced–yeah, easily 90 percent, because there again all I have to do is go into it, load the data, which takes, you know, two to three minutes, and then it just sort of unfolds before me.  And what it allows me to do is to concentrate on the metrics rather than the process.  Because if I’m having to do this stuff with spreadsheets, that’s an awful lot of process involved before I can ever get to the metrics. 

Ms. Kelly Luhring:  Um-hmm. 

And in your opinion, what feature has become the most indispensible or critical for your business?

Mr. Gregg Moore:  Well, I like that peace of mind cash flow model that’s built into it an awful lot. 

What I also like is the Comparanator, which, again, very, very easily allows you just to pick this or that and just start, you know, trending things and comparing things.  That’s something else that would be much more difficult to do in Excel, for instance. 

But, those two things really stand out for me as being extremely important, being able to quickly compare things and being able to very quickly see what my cash flow is doing.

Ms. Kelly Luhring:  Okay. 

And how has SurvivalWare enhanced your focus on analysis and projections?

Mr. Gregg Moore:  It has certainly helped.  You know, there again, is it something I could have done in Excel?  You know, do cash flow projections using Excel?  Sure, that’s pretty standard MBA stuff.  But, SurvivalWare, again, just makes the process so much easier because it already had some models built into it that you can pick and choose from. 

Again, why in the world would I go invest that amount of time in a spreadsheet when, you know, here it is just kind of laid out in front of me?  And if I want to choose this model, I can and see what it does.  And if–you know, if I want to choose another model, I can choose it and see what it projects and then go from there.

Ms. Kelly Luhring:  And what are some of the differences that you notice between models that are in there?

Mr. Gregg Moore:  Well, you know, you can get different results depending upon whether you’re doing–whether you’re trending things, say, seasonally or whether you’re trending things based upon an assumption of a 5 percent growth. 

Or, you know, the neat thing is is that you can apply all of these different models to see which one you think kind of best fits reality.  It doesn’t force you down one road of projecting cash flow.

And again, that’s–that process is far easier in SurvivalWare than it would be in using Excel, for instance. 

Ms. Kelly Luhring:  So, it allows you more flexibility.

Mr. Gregg Moore:  Um-hmm, yeah.  Flexibility and speed, yes. 

Ms. Kelly Luhring:  Okay. 

And what types of businesses do you think would benefit from SurvivalWare? 

Mr. Gregg Moore:  Oh, gosh.  Be pretty tough to imagine one that would not benefit from it, really.  You know, any kind of business is going to have cash flow to deal with.  And so, any–you know, any business that’s in business is going to benefit from this.  If they’re not doing cash flow analysis, they’re probably not going to be around. 

Ms. Kelly Luhring:  And then, also just one, do you have perhaps a real life example of where SurvivalWare kind of helped your business in a way, or avoided disaster, maybe? 

Mr. Gregg Moore:  I think probably not in the avoiding disaster area, because we’re pretty conservative in how we do things. 

What it did help me to do was just kind of see what cash flow had looked like over the past several years, and so I can see bumps in the road.  For instance, if there’s a month or two or a particular season of the year that’s been kind of slow for us, then it helps me to prepare for that, to see it coming, as it were, and, you know, maybe try to put a little bit more cash away during the immediate few months prior to that so that we can weather the little storm that comes up over the slow period.  We can see those coming. 

Ms. Kelly Luhring:  Um-hmm.  Okay.

And would you recommend SurvivalWare to a friend or a colleague? 

Mr. Gregg Moore:  Oh, sure, without reservation.

Ms. Kelly Luhring:  Well, great. 

Do you have any questions or last minute comments?

Mr. Gregg Moore:  No, not really, it’s–well, other than that it’s a great software package.  Rusty’s done a fantastic job with it. 

And I’ll tell you, for a small business to be able to have this kind of a capability at its fingertips, there’s just no reason not to do it. 

Ms. Kelly Luhring:  Okay, Gregg.  Well, thank you so much for your time today, this afternoon.  Well, afternoon, nighttime.

And also, I just wanted to make sure that we have your permission to use any of your comments or any of the content of this interview for commercial purposes. 

Mr. Gregg Moore:  Yeah.  Go right ahead.

Ms. Kelly Luhring:  Okay, great.

Well, thank you so much, and you have a great day.

Mr. Gregg Moore:  All right.  Pleasure talking with you, Kelly. 

Ms. Kelly Luhring:  Thank you.

Mr. Gregg Moore:  Bye-bye. 

Ms. Kelly Luhring:  Bye-bye. 

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Outtakes

For those of you interest in Paris or Europe, here’s Kelly talking about the weather while warming up for the interview.

Interview with Mr. Gregg Moore

May 7, 2010; 4:00 p.m.

 

Ms. Kelly Luhring:  Hi there.

Mr. Gregg Moore:  Hello.

Ms. Kelly Luhring:  And so, you’re in Greensboro, North Carolina? 

Mr. Gregg Moore:  Yes, I am, and it’s a beautiful day.

Ms. Kelly Luhring:  It’s actually been quite chilly up here in Paris. 

Mr. Gregg Moore:  Uh-huh.

Ms. Kelly Luhring:  But, it’s a little bit warmer today.  We’ve got some sunshine. 

Mr. Gregg Moore:  Oh, very nice.  Very nice.

So, you are in Paris, huh?

Ms. Kelly Luhring:  Yeah.

Mr. Gregg Moore:  Oh, very nice.  Are you selling SurvivalWare over there?    

Ms. Kelly Luhring:  No, actually we’re kind of investigating the market.  And I had previously moved here in September of 2007 working as a nanny.  So–.

Mr. Gregg Moore:  –Well, it’s a beautiful place.  I haven’t been to Paris in quite a long time, but–.

Ms. Kelly Luhring:  –Oh, okay–.

Mr. Gregg Moore:  –It’s just a gorgeous city. 

Ms. Kelly Luhring:  And so, when was the last time you were there?

Mr. Gregg Moore:  Oh, gosh.  Twenty years ago, easily. 

Ms. Kelly Luhring:  Oh, wow.

Mr. Gregg Moore:  Long, long time.  Long time. 

Ms. Kelly Luhring:  Cool.

Mr. Gregg Moore:  And growing up, my dad was in the Army.  So, we actually lived in Germany when I was young and got to travel a good bit throughout Europe.  And I don’t–.

Ms. Kelly Luhring:  –Cool–.

Mr. Gregg Moore:  –Remember Paris at that time.  But, I do remember going into the northern part of France and, of course, all over Germany and the Swiss Alps and such.  So–.

Ms. Kelly Luhring:  –Oh, nice.

Mr. Gregg Moore:  Yeah.  I have some good memories of Europe. 

Ms. Kelly Luhring:  I haven’t quite made it over to Germany, but I’ve been to Madrid and to Amsterdam and Rotterdam. 

Mr. Gregg Moore:  Amsterdam’s great.  Get up to Copenhagen, too–. 

Ms. Kelly Luhring:  –Yeah–.

Mr. Gregg Moore:  –If you can do it.  I lived in Saudi Arabia for a while and spent a Christmas in Copenhagen. 

Ms. Kelly Luhring:  Oh, okay.

Mr. Gregg Moore:  There’s not a whole lot of daylight hours up there that time of the year.  It’s a little bit on the gray side.  But–.

Ms. Kelly Luhring:  –Uh-huh–.

Mr. Gregg Moore:  –It is an absolutely beautiful place to be around the Christmas season.  So–.

Ms. Kelly Luhring:  –Oh, wow–.

Mr. Gregg Moore:  –I would highly recommend Copenhagen.

Ms. Kelly Luhring:  Cool. 

Well, why don’t we go ahead and get started? 

Mr. Gregg Moore:  Certainly.

Ms. Kelly Luhring:  So, why don’t you tell us about your company and your specific role in the company?

Mr. Gregg Moore:  Sure.  Well, I’m the President of a company called Workplace Integra, and we deal with occupational safety and health.  We provide onsite consulting, mostly in the area of occupational hearing conservation, but some other areas as well.

Work on SurvivalWare 3.1 is well underway

Sometimes the development cycle moves faster than others.   SurvivalWare Pro 3.0 was driven by our desire to put customization tools in the hands of power users in preparation for a ramping up of demand.  Version 3.1 is customer driven.  A customer (AlphaGraphics, Inc.)  is paying us to make the Budgeting module simpler to use, while at the same time extending the budget to the Balance Sheet and Cash Flow statements from just the Income Statement.  It’s a big deal, but it sure is going to be nice.  I’m doing the work for the AlphaGraphics model, and at the same time making the changes to our generic Fort Knox model so that the new feature is available to the rest of the customer base.

By the way, if you haven’t seen it yet, take a look at this brand new video of Kevin Cushing, CEO of AlphaGraphics, explaining why SurvivalWare has become a system standard for AlphaGraphics.   He also lays down a challenge to improve SurvivalWare to make it more integrated with their business planning process.

Kevin Cushing on SurvivalWare as System Standard for AlphaGraphics

One of the nice things about the new budgeting module  will be that you can work on the current year budget or next year budget at any time.  Previously it was tough to make changes to the current year budget.

The user interface has been improved, with numbers and checkmarks to help you keep track of your progress.  Here is a sample screen:

It should be ready for beta testing in a week to 10 days.  We’re hoping to get it released in time for the annual AlphaGraphics conference in early July. 

In addition to the new Budgeting Module, there will be other enhancements, such as the ability to enter notes in a company file that can be displayed to help the user remember how to load data or do something else.

Don’t worry – anyone who purchased version 3.0 will be upgraded to 3.1 automatically.  We plan on an upgrade to the technical documentation with version 3.1 as well.

Most AlphaGraphics users are waiting for 3.1 before upgrading from 2.0 so they have to do it just once.

Please leave comments if you have suggestions for improvements to SurvivalWare.  And don’t worry Kirk, we’ll get better looking icons for Balance Sheet and Cash Flow reports before final release.

Customer Interview: Terry Armstrong

I worked closely with Terry Armstrong during the Spring of last year to help her use SurvivalWare in her financial analysis engagements, often under considerable time pressure.  She was most appreciative of the help, and graciously agreed to spend time with Kelly relating her experience with the software.  I am happy to announce that several enhancements found in SurvivalWare version 3.0 are a direct result of Terry’s insights and “dumb questions.”

Some excerpts:

“due diligence .. financial analysis .. projection analysis”

 

What I was doing was working with a company that linked up businesses who were interested in going public with hedge funds for finances.  And what we did was we did due diligence work to assess companies’ operations and we did some past financial analysis and some projection analysis for the hedge funds to look at and determine whether this company was a viable operation for them to invest in. 

“Spreadsheet .. was just full of errors”

 

I was engaging with a company that had 250 general ledger accounts that needed to be boiled down into 24 categories of income expense categories and consistently reporting how they did versus how they said they were going to do.  So, I would be trying to take all of these account balances and push them into this 24 account format every time I was going to be reporting.  And it was crazy to do that with a spreadsheet.  It was just full of errors and I started searching on the internet for a tool that would allow me to do that and I knew it was going to be working with projections.

“signed up for it because it had a free trial..”

 

So, I found SurvivalWare on the internet and signed up for it because it had a free trial.  It had high recommendations.  Seemed to be a tool that would work for what I wanted it to do and I—so I signed up for the free trial and began to use it.

By the time my 30 days were up, I realized that it was something that was absolutely imperative for me to have to do this work and it worked really well. 

“And If I had had to do that with the spreadsheet, I would have been crazy.  It would have been absolutely insane.”

 

To take it from the raw data, from the company and put it into their spreadsheet would have been massive collating and sorting process because it had to be done 60 times.  And while we were analyzing and trying to figure out how to put their projections into a future basis, there would be lots of changes that were happening during this analysis process.  And If I had had to do that with the spreadsheet, I would have been crazy.  It would have been absolutely insane. 

The complete edited Transcript:

Interview with Terry Armstrong

January 12, 2010 – 9:30 pm ET

 

Ms. Kelly Luhring:  Tell us about your company and your specific role in the company.

Ms. Terry Armstrong:  I have to tell you a story of a company that I no longer am working with to connect it to SurvivalWare because about six or eight months ago, I stopped doing that work and I may go back to it, but right now the financial world has flipped a few things around, as you know, and what I was doing at that time is no longer available to me.  So, I’ll tell you about that story because what I’m doing now doesn’t relate to SurvivalWare.

What I was doing was working with a company that linked up businesses who were interested in going public with hedge funds for finances.  Okay?  And what we did was we did due diligence work to assess companies’ operations and we did some past financial analysis and some projection analysis for the hedge funds to look at and determine whether this company was a viable operation for them to invest in. 

Ms. Kelly Luhring:  And so, how did you find out about SurvivalWare then?

Ms. Terry Armstrong:  Well, when I was doing this work, I was having to take companies’ financial data and distill it into a specific format that the hedge funds wanted to see it in and it was a grueling process – changing significantly every time I had a new engagement.  Also if the hedge fund decided to engage the company and move forward, there would be future analysis of, “this is how you said you were going to do and this is how you did.”  I was engaging with a company that had 250 general ledger accounts that needed to be boiled down into 24 categories of income expense categories and consistently reporting how they did versus how they said they were going to do.  So, I would be trying to take all of these account balances and push them into this 24 account format every time I was going to be reporting.  And it was crazy to do that with a spreadsheet.  It was just full of errors and I started searching on the internet for a tool that would allow me to do that and I knew it was going to be working with projections.

So, I found SurvivalWare on the internet and signed up for it because it had a free trial.  It had high recommendations.  Seemed to be a tool that would work for what I wanted it to do and I—so I signed up for the free trial and began to use it.

Ms. Kelly Luhring:  Oh, great.

And after you began using it, then you decided to go from there and actually buy a package?

Ms. Terry Armstrong:  Oh, definitely.  By the time my 30 days were up, I realized that it was something that was absolutely imperative for me to have to do this work and it worked really well.  I worked with Rusty who was giving me instruction and help all along the way because I was using it for a purpose that the software was probably not intended for.  A major sorting tool is what I was using it for and to keep my sorting consistent throughout the periods.  So, I might end up with five years worth of financial information from a company in each of the five years would need to be put in and report out in these specific 24 categories and present income statements and balance sheets in these specific categories each time.  And that is what SurvivalWare did for me. 

Ms. Kelly Luhring:  Did these companies use a specific type of accounting software. 

Ms. Terry Armstrong:  Well, it varied. 

Ms. Kelly Luhring:  And so, how easy was it to learn how to use SurvivalWare?

Ms. Terry Armstrong:  It was pretty easy.  I did use Rusty a lot.  He gave me a lot of pointers as to how to do it, but it functioned very well once I got the hang of it. 

Ms. Kelly Luhring:  And so, was it easy to load data from different accounting software and do projections?

Ms. Terry Armstrong:  Well, the ease of loading from the accounting software depended on whether the client was able to get the accounting data into a spreadsheet format because I would either download a couple of times.  It works pretty well with QuickBooks, but even QuickBooks downloaded into an Excel spreadsheet and then into SurvivalWare.  So, that’s the way I always used it.  I created a spreadsheet from the accounting system and then fed the spreadsheet into SurvivalWare.  And I got to build my row maps and went from there.

Ms. Kelly Luhring:  And before were you just relying on kind of Excel?  What was your user experience with Excel and what are some of its limitations?

Ms. Terry Armstrong:  Well, I’ve been using Excel since it was Lotus and there was some product even before that, so I have been using a spreadsheet a long time – 30 years, I guess.  Mostly I’ve used Excel and I’m a pretty high level user of Excel.  For the purpose that I was using it, it would have been a nightmare to try to do this with Excel.  I could not have done it with Excel without a lot of errors, and inconsistencies. You know, to take 100 general ledger accounts and pull them into a 24 account level of structure consistently over years, past data and future data would have been an Excel nightmare.

Ms. Kelly Luhring:  And so–?

Ms. Terry Armstrong:  –And trying to figure out how to do it.  I never did it with Excel.  As soon as I saw the tasks and realized what was going to be necessary, I started looking for another tool because I wasn’t going to have that kind of patience.  I knew it wasn’t an application for Excel, you know?

Ms. Kelly Luhring:  And how was SurvivalWare able to do what Excel – what would have been a nightmare in Excel?

Ms. Terry Armstrong:  Well, once you have the account number or account name and you link it in the row map to the final account name, all you have to do is just import it and it does all that sorting for you. 

Ms. Kelly Luhring:  And so, how often were you using SurvivalWare and how long did you use it for?

Ms. Terry Armstrong:  I used it about a year.  My work had distinct phases to it.  I would spend time at the client’s site gathering a lot of information and preparing a narrative report and then I would move into the financial analysis phase.  And when I moved into the financial analysis phase, I worked with SurvivalWare constantly for two or three weeks for that client.  Once I got the financials in the format that I needed them in, then I would move into the next phase of the project which was to do some projections with regard to stock sales and purchases and then my intent was to use SurvivalWare again once the client company and the hedge fund linked up to assess their performance against their projected performance.  But, I never got to that phase of it. 

So, what I was doing during the year that I was working with SurvivalWare was intense working with SurvivalWare in that middle phase of the reporting work that I did for each client.  So, I probably had about 15 clients that I went through that process for in a year.

Ms. Kelly Luhring:  And what is it that you liked best about SurvivalWare? 

Ms. Terry Armstrong:  Well, I like its functionality.  I liked the way it took data from many different types of sources and allowed me to pull it into one piece of software.  I think it would have been outstanding and really valuable to compare your actual performance with the projected performance. 

The part that I liked the best that I used was just being able to take a massive amount of data and consistently and predictably distill it into a comprehendible format of income statement and balance sheet to analyze that data.

Ms. Kelly Luhring:  And what did you—you were pretty content in terms of the financial projections being on point and not full of errors?

Ms. Terry Armstrong:  Yeah, I found it pretty easy to use and pretty flexible so that it could accommodate a lot of different scenarios.

Ms. Kelly Luhring:  And what did you think about the graphics as well?

Ms. Terry Armstrong:  I didn’t get into the graphics very much.

Ms. Kelly Luhring:  So, was the data showing—just showing all of the past and then there’s perhaps financial information as well as the financial projections and they were satisfied with that format?

Ms. Terry Armstrong:  Yes, they didn’t want to see anything graphical.  They wanted to see the numbers in a specific format and that’s all we showed them in addition to narrative work that we did.

Ms. Kelly Luhring:  And were they satisfied with the SurvivalWare projections?

Ms. Terry Armstrong: Actually, I would take the SurvivalWare data and put it back into a spreadsheet format because that is what they required.  It would be month-by-month for five years.  So, we’re talking about 60 columns of data had to be pushed through this sieve to get it from two or 300 general ledger accounts pulled down to 24 general ledger accounts that were reported in a financial statement format – sixty times for one client.  So, I put it back into a spreadsheet format for them to look at because that’s what they wanted.

Ms. Kelly Luhring:  Oh, okay.

Ms. Terry Armstrong:  To take it from the raw data, from the company and put it into their spreadsheet would have been massive collating and sorting process because it had to be done 60 times.  And while we were analyzing and trying to figure out how to put their projections into a future basis, there would be lots of changes that were happening during this analysis process.  And If I had had to do that with the spreadsheet, I would have been crazy.  It would have been absolutely insane. 

And what SurvivalWare allowed me to do was to have a holding place where the links between the huge number of general ledger accounts that the company was using to collect their information.  And the few number of general ledger accounts such as hedge fund wanted to see all this data and allowed me to keep those links straight month-by-month through a five month historical process—I mean a five year historical process and a five year projection period.  So, it was a massive amount of data that was constantly being manipulated and reworked until it finally settled into the product that would be presented to the hedge fund in the form of a spreadsheet.

Ms. Kelly Luhring:  And so, in your opinion, how much time do you think you saved using it?

Ms. Terry Armstrong:  Oh, an immense amount of time.  Hundreds of hours per client.

Ms. Kelly Luhring:  And then, what types of businesses do you think would benefit from SurvivalWare?

Ms. Terry Armstrong:  Well, I think the projection capability which I never really got into for myself, but I looked into because I had expected it to go in that direction.  Any kind of business would benefit from that, particularly smaller businesses that don’t have any mechanism for doing that already.  Ones who aren’t projecting their cash flow, who don’t know what’s going to happen to them with regard to cash flow over the next “x” months or years. 

Ms. Kelly Luhring:  And did you feel like, Terry, it was adequate customer support?

Ms. Terry Armstrong:  Oh, outstanding.  Outstanding customer support. 

Ms. Kelly Luhring:  And would you recommend it to a friend or a colleague?

Ms. Terry Armstrong:  I definitely would.

Ms. Kelly Luhring:  Well, do you have any maybe last minute questions or comments?  Something that possibly you would have liked SurvivalWare to have done that it wasn’t able to?

Ms. Terry Armstrong:  Well, the only other thing I would add is that I was able to get help any time, day or night, and it was invaluable.  I got into this work not knowing how it was going to function and if I hadn’t had SurvivalWare, I would not have continued with it.  I would have had to get out of it because I’m not interested in pushing numbers through spreadsheets like that.  That would have been grunt work that would have been just driving me insane.

I really appreciated it and I thought Rusty was outstanding and he was always willing to help me figure out how to do things with the software that maybe somebody else hadn’t asked to do before and I really appreciated it.  I thought it was an outstanding piece of software and the price was unbelievable.  Definitely a very good value.

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Customer Interview: Mike Wilkerson, CFO of Dominion Equipment Parts

Mike Wilkerson is a savvy CFO who knows the importants of doing cash flow projections. 

Here are some excerpts from an interview that took place January 10,  2010:

Does what any small business needs to do

“I Googled cash flow or something along those lines and SurvivalWare came up and so I said, well, boy, it’s certainly cheap.  It’s $500, not a lot of risk involved.  I’ll try it.  It probably won’t do what I need it to do, but it’ll be a start in the right direction.  And really, it’s been more than I expected.  For the cost, it’s got a lot of little bells and whistles and does exactly what any small business needs to do which is projecting where the cash is going and where it’s going to be at any certain point in time and that’s critical, obviously, if you need to borrow money from the banks.”

Gain a competitive edge when requesting bank loans

“The key is — anytime a small business can present financial statements and cash flow statements to the bank’s liking –  that separates you from a large group of their customers because a lot of times, they’re not that sophisticated.” 

“Banks love balance sheets and income statements, but they really like cash flow statements and they like to see that everything ties down and balances back.  SurvivalWare does that.”

A visual tool to show how things play out

“It is a tool where a lot of times owners or companies and people within organization, they see if you sell a $30,000 piece of equipment, they see $30,000.  They don’t see that maybe it’ll cost you $20,000 to buy that piece of equipment, that you gotta pay some people, that you’ve got some overhead and then, at the end of the day, you don’t end up with $30,000 in cash.  So, it’s been, like I said, it’s been a very visual tool to show how things play out, where the money all flows to.”

Works great with MAS90 accounting software

“We’re using a fairly large company called Sage Software and they market a product called MAS90 that we converted to probably in 2004.  We moved from a DOS-based system to MAS90.  It gives you a cash flow statement, but just no way to do cash flow projections.  The beauty is that we’ve been able to export those financial files out of MAS90 in a CVS format into SurvivalWare without having to re-input all that data.”

Visit their website at: http://dominionequipmentparts.com/

Here’s the complete interview:

Interview of Mr. Mike Wilkerson

January 10, 2010 – 5:00pm ET

Ms. Kelly Luhring:  Why don’t you go ahead and tell us about your company and your specific role in the company?

Mr. Mike Wilkerson:  My role is the Chief Financial Officer and we have four operating entities here involved in heavy equipment in some way.  We’ve got a company called Dominion Equipment Parts and we distribute about 10 different product lines nationally through a warehouse distribution system and we’re selling parts and rubber tracks and hydraulic hammers and things of that nature to equipment dealers and end users. 

And we’ve got another company called American Track Carrier, where we import a piece of equipment from Japan and we sell it to end users and dealers or we sell it to an affiliate company, American Track Rentals and who, in turn, then rents this equipment to equipment dealers and end users in the natural gas pipeline industry.

And then we’ve got a fourth company, Dominion Credit, which finances used construction equipment for equipment dealers.  So, collectively, we’ve got separate—we’ll we’ve got separate four—we’ve got separate LLCs for those four companies and we operate those individually.  But, it’s some–.

Ms. Kelly Luhring:  –Okay.

Mr. Mike Wilkerson:  And so, I was going to say, it’s somewhere in the neighborhood of 30 to $40 million in revenue. 

Ms. Kelly Luhring:  And so, what other industries do you have experience in?  How long have you been with this current company?

Mr. Mike Wilkerson:  I’ve been with this company almost 10 years.  My previous experience has been in insurance in the financial industry, financial services industry is in banking and auditing.

Ms. Kelly Luhring:  And so, how did you find out about SurvivalWare and what made you decide to buy it?

Mr. Mike Wilkerson:  Well, basically, it was kind of on a whim.  You know, I needed something to do some projections that didn’t require that I have all the formulas right in Excel to make sure that it [unintelligible] and that I didn’t miss something.  So, I was looking for something – a tool that, you know, would work internally for us and it would project to the banks well. 

And so, I Googled cash flow or something along those lines and SurvivalWare came up and so I said, well, boy, it’s certainly cheap.  It’s $500, not a lot of risk involved.  I’ll try it.  It probably won’t do what I need it to do, but it’ll be a start in the right direction.  And really, it’s been more than I expected.  For the cost, it’s got a lot of little bells and whistles and does exactly what any small business needs to do which is projecting where the cash is going and where it’s going to be at any certain point in time and that’s critical, obviously, if you need to borrow money from the banks. 

So, I guess—is it your dad that I have been talking with? Rusty?

Ms. Kelly Luhring:  Uh huh.

Mr. Mike Wilkerson:  Okay.  Yeah, and, you know, he’s been great to work with and helpful as I have come across problems or issues related to the software.

Ms. Kelly Luhring:  And what type of accounting software are you familiar with or are you—have you used in the past or are you still using?

Mr. Mike Wilkerson:  Well, we’re using a fairly large company called Sage Software and they market a product called MAS90 that we converted to probably in 2004.  We moved from a DOS-based system to MAS90.  So, we’ve been on that since 2004.  And it gives you a cash flow statement, but just no way to do cash flow projections.  So—and the beauty is that we’ve been able to export those financial files out of MAS90 in a CVS format into SurvivalWare without having to re-input all that data.

Ms. Kelly Luhring:  Great.

And then, what is your user experience with Excel and what are some of its limitations?

Mr. Mike Wilkerson:  Well, you know, Excel is a great tool.  I have some knowledge.  I am certainly not by far a super user or anything, but you don’t know what you don’t know.  Rather than trying to take the time and learn Excel and all its features and how to build a cash flow model with all those formulas, it’s already been done for me.  You know, here’s what I’m asking for and what I was looking for and was something that probably a lot of small businesses are looking for.  So, nothing unique.  So, rather than take the time to learn Excel to the degree I didn’t know or did and didn’t do, I just decided to invest that time in an outside cash flow software package. 

Ms. Kelly Luhring:  And in your opinion, was it easy to learn how to use SurvivalWare?

Mr. Mike Wilkerson:  It was fairly easy.  I mean, you know, again, like I said, Rusty’s been very helpful in making that transition and it’s like anything else, you’ve got to stay, you know, you can’t put it away for a month and pick it back up in another month or two.  You kind of forget where you were or how you did things.  So, it was a—it wasn’t a difficult transition, but once you learn the background for the model behind some of the things in SurvivalWare it becomes pretty easy.

Ms. Kelly Luhring:  And so, how often do you use it?

Mr. Mike Wilkerson:  I use it at least every month.  I update monthly and we close our month end for the companies.  I go ahead and export those files into SurvivalWare and then see how that plays out for the remainder of the year.  And, of course, here at year end, it’s—I’ve been using it fairly often as we go and look at 2010 and how we think things are going to play out. 

Ms. Kelly Luhring:  And how long have you been using it for?

Mr. Mike Wilkerson:  Probably maybe less than a year I would say.  I can’t remember exactly, but somewhere in that year timeframe. 

Ms. Kelly Luhring:  And when you were going through the learning process, did you take advantage of the webinars that were offered or did you rely mostly on the customer support from Rusty?

Mr. Mike Wilkerson:  I think I did one webinar, but mostly it was having Rusty walk me through how to import the files because really that’s the most difficult part is importing the files, but once you do it and you get it mapped, then it’s all—then it’s a matter of just understanding, okay, if I change this number, where does it fall out?  What else changes?  So—but, Rusty was probably a bigger help in getting the files exported into SurvivalWare and then understanding, was there a programming issue?  Something that I didn’t see?  Or didn’t understand?

Ms. Kelly Luhring:  How easy is it to load data and do projections?

Mr. Mike Wilkerson:  It is—like I said, once you do it a couple times, it’s very easy.  The hard part is getting the first time doing it and mapping all the accounts within SurvivalWare.  But, you know what?  After that, it’s just a matter of loading a CSV file and it shows up on all the financials.

Ms. Kelly Luhring:  And now, do you use it for all four different LLCs?

Mr. Mike Wilkerson:  I use it for three of the four LLCs.  I really don’t need it for the finance company. 

Ms. Kelly Luhring:  Why is that?

Mr. Mike Wilkerson:  We just don’t have a need for projections and all of that with—we know what the portfolio is and we know what it spits off as far as cash.  So, it’s not as critical.

Ms. Kelly Luhring:  And what do you like best about SurvivalWare?

Mr. Mike Wilkerson:  I think, you know, two things.  It’s fairly intuitive once you get over the initial learning curve.  Two, the cost is relatively inexpensive for I think a pretty powerful software program.  You know and the key is really to the bank’s liking and anytime a small business can present financial statements and cash flow statements, that usually separates you from a large group of their customers because a lot of times, they’re not that sophisticated. 

Ms. Kelly Luhring:  And so, what has been missing from your previous financial projections or accounting software that SurvivalWare provides?

Mr. Mike Wilkerson:  SurvivalWare does what we didn’t have before, and that’s a projection tool.  You know, anybody can put projections down in Excel for sales, but the key is cash.  You can book receivables all day long but if you don’t collect, your cash isn’t going to happen.  So, that’s where SurvivalWare has filled in a gap that we currently had that our other systems didn’t have.  So, like I said, it’s filled a void that was missing.

Ms. Kelly Luhring:  And can you think of maybe a specific example and maybe one of the companies where having that projection really helped kind of, you know, maybe, oh, no, I can speak the word in French, but not in English.  This is terrible.  That you could avoid any kind of shortfall?

Mr. Mike Wilkerson:  Well, I mean certainly in this economy in 2009 and going forward in 2010, I have been able in, obviously in 2009, to lay those projections out, show the owners of the company who are not accountants, and show them where things are going to be.  So, we kind of know ahead of time, generally speaking where we’re going to be.  But, this puts some specific criteria to it. 

What type of loss?  What type of gain based on sales projections are we going to be?  How much cash is that going to throw off and where are we going to be with our line of credit with the bank?  Are we going to be maxed out?  Are we going to have available—availability in the line to make additional purchases?  So, that’s been real critical in 2009, being able to say, here’s what we’re going to look like in the next three months, in the next six months.  And then, if we take those projections out and say, okay, it worked in ’09, I proved that to you, here’s—let’s take our projections for ’10 and here’s where they’re going to be.  Where do we need to improve?  Where do we need to kind of watch things to make sure that we don’t get in trouble?

Ms. Kelly Luhring:  And would you say you have noticed a difference and maybe the profitability or in the satisfaction of the company?

Mr. Mike Wilkerson:  I don’t think this is just a tool.  It certainly is not going to make profits or create losses. But it is, again, it is a tool where a lot of times owners or companies and people within organization, they see if you sell a $30,000 piece of equipment, they see $30,000.  They don’t see that maybe it’ll cost you $20,000 to buy that piece of equipment that you gotta pay some people, that you’ve got some overhead and then, at the end of the day, you don’t end up with $30,000 in cash.  So, it’s been, like I said, it’s been a very visual tool to show how things play out, where the money all flows to.

And when you have historical information to prove that, and then to project those out, you know, it’s not numbers you’re making up.  It’s again, trying to show people where that dollar goes and how it flows through to the bank account at the end of the month.

Ms. Kelly Luhring:  And would you say that the bank has been satisfied with the visuals that are provided by SurvivalWare and just the financial projections, in general?

Mr. Mike Wilkerson:  Yes they have.  They’ve been very pleased with our numbers.  We’re dealing with lending requests in the millions of dollars.  Banks just aren’t going to lend you millions of dollars on an idea or on past performance.  They want to see how this is going to play out.  So, it’s been very beneficial in that fact that we’ve got the numbers.  We know—we’ve taken the time to input them and see how this thing is going to play out, so that it’s not just an idea, it’s an actual—there’s actual numbers to support the idea and that it does cash flow.  Banks love balance sheets and income statements, but they really like cash flow statements and they like to see that everything ties down and balances back.  So, and SurvivalWare does that. 

Ms. Kelly Luhring:  Great.

What types of businesses do you think would benefit from SurvivalWare?

Mr. Mike Wilkerson:  Do you know what?  I think any small business that’s got a sales revenue that may be – whether it’s seasonal, whether it is static, I think any small business, you know, should invest in some type of software that shows cash flow projections, so that it is like your personal household budget.  You gotta know where the dollars go so at the end of the month, you’re like, God, what happened?  Where did the money go, you know?  I got paid.  But, I don’t have any money in the bank account.  Well, you have to go through that laundry lost of things, besides the mortgage and the utilities, you gotta figure out, well, how much did I eat out?  You know?  You’ve got to do the same thing with the business is, you know, where does all this money go?  And it’s not—it’s a limited supply.  So, I think any small business that wants to (one) find out where their dollars are going and (two) you know, how can they grow that business?  You know, SurvivalWare certainly seems to be a good tool at a reasonable price.

Ms. Kelly Luhring:  And do you feel like there’s adequate customer support? 

Mr. Mike Wilkerson:  Yeah, I mean, I’ve always called and Rusty’s always answered the phone and, you know, if he can’t get back with me, he’s prompt in getting back with me at a later time. 

Like I said, it exceeded my expectations for the price that we paid.  I really didn’t expect it to be that great of a tool.  I didn’t expect to get the support that I’ve gotten.  So—but, in being right up in northern Virginia, you know, it’s kind of nice.  It’s not somebody across the country.  So, it’s worked out for a lot of reasons. 

Ms. Kelly Luhring:  And would you recommend it to a friend or colleague?

Mr. Mike Wilkerson:  Yeah, I certainly would, yeah, in a small business roundtable.  Certainly, how do you do things better?  How do you do things smarter?  I would certainly recommend it to someone that had the same need that I did.

Ms. Kelly Luhring:  Great.

Can you think of any last minute comments or questions?

Mr. Mike Wilkerson:  You know, the only couple of things that come to mind is as far as improvements and that’s really somewhere having a minimum cash balance.  Right now, I don’t know that there’s something in the system that allows you to say, I want to maintain a balance of $100,000 at all times.  So, you kind of have to play around with those numbers to get back to where you need to be. 

And then, I think there is a limitation on term notes in the system to five, where we probably have 10 or 12 that I’d like to input in the system, but I can’t do it.  I have to lump it all together and then, make my own assumptions as far as what those amortization schedules look like.  But, for my initial purposes, it’s worked very well.

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ARC Loan analysis using SurvivalWare

We recently had a prospect (now customer) express the need for a tool to do the cash flow projections in support of his ARC Loan application.  I was putting the finishing touches on the new Fort Knox model (solid, substantial, money-focused, good as gold) for SurvivalWare Version 3.0, which according to an April blog post, is just around the corner.  

He needed something right away so he could get his application in.  He had found SurvivalWare via Philip Campbell’s website.  I’ve kept the advertising turned off since February so the whole company can focus on getting this new release out the door.  Can’t be disturbed by pesky prospects asking questions about software not yet ready for sale.  But this guy was very nice, and educated me on the whole ARC loan program, and we worked out a deal where  I would load his historical data for him and walk him through the steps for doing a cash flow projection via a web session.  I figured it would be a good test of the new model, and especially the Term Loan Calculator I had just added.

Naturally SurvivalWare flunked with flying colors.  We had to use a kludge to model the ARC Loan because its characteristics were not normal.  Plus, I had made room for a maximum of 24 months of projections – but less than that as each month of the current year passes.  So about 18 months at this point.  Plus there were no reports to show the projected Quarters instead of months.

So I decided to add an additional 24 months for projections, so that the bank would not have an excuse to exclude an applicant because it showed 18 and not a full 24 months of projections.  Also I added a special ARC Loan option to the Term Loan Calculation in the Forecast Tool.  It models correctly one of these silly $35,000 SBA with a drawdown period, 12 month deferral, and interest picked up by the feds.  I couldn’t resist and added some analysis features to look at these loans from each of the three points of view:

• Small Business Borrower
• Bank making the Loan
• SBA / Federal Government

I’ll share the results of that analysis in another blog post.  I really hope that Tim Geithner and the other senior government officials look at things from “our” point of view when crafting the new Small Business program.  They have an opportunity to do it right this time.

In the meantime, if you are desperate for a tool to help with the projections, I am allowing pre-release versions of SurvivalWare to be sold on a limited basis.  Give me a call or shoot me an email.  Current estimate on release of version 3.0: early August, 2009.

Year End Rollover

Your SurvivalWare data file (.MTX) holds a limited amount of historical data.  At the end of each year, there is a process you go through called a “Rollover” to archive the oldest 12 months of data, and make room for the new year.

 

The time to do the rollover is when you are ready to load January data – which is probably some time in February.  You can do it right AFTER loading December data.  There is no harm in doing it then.

NOTE: If you are on a fiscal year that ends in a month other than December, you would do the rollover after loading the first month of the new fiscal year, not January.

 

To do the rollover, go to Rusty’s Toolbox from SurvivalWare’s main screen.

 

As a way of preventing accidental rollovers, SurvivalWare requires the “Last Actual Month” be set to December (the last month of the Fiscal Year) before you are allowed to do a rollover.  From Rusty’s Toolbox you can set the Last Actual Month yourself – select Data / Set Last Actual Month.

 

 

When you are ready to do the Rollover, select Data / “Rollover this file”.

 

 

The first box controls what the settings are to be AFTER the rollover.  Set the month to January (or the first month of the Fiscal Year if you are on a fiscal year).  Set the year to the new fiscal year.  (2009 for those rolling over from 2008).

 

You have four options for dealing with the Budget:

 

1. Clear budget columns – just sets all the budget values to zeroes, for both the 2009 Budget, and the 2010 budget.
2. Preserve budget data – leaves the 2008 budget in the 2009 budget columns.
3. Move projected values into Budget Columns – the monthly projections you made for 2009 are moved into the 2009 Budget columns.
4. Move Next Year budget into Current Year Budget.  During 2008, you are allowed to work on the 2008 budget (Current Year) or the 2009 budget (Next Year).  All actual to budget reporting uses the Current Year.  If you’ve already prepared the 2009 Budget,  you can move it into the Current Year budget columns during Rollover. (This is the default).

 

When you click OK, SurvivalWare saves a copy of the file pre-rollover in the Archive directory, and tells you its name.  Your current file will now show a current fiscal year of 2009.  You can select File / Properties, and click on “This Data File” tab to check.

 

 

 

Time periods stored in a SurvivalWare MTX file

 

2008 file prior to rollover:

 

Months:  Dec 2005 to Dec 2009

Years: 2010 to 2019

Current Budget: 2008

Next Year Budget: 2009

 

2009 file after rolling over the 2008 file:

 

Months:  Dec 2006 to Dec 2010

Years: 2011 to 2020

Current Budget: 2009

Next Year Budget: 2010 

 

Note:  The time periods stored may vary from model to model.  The example above is for the generic FM2008 model that comes with SurvivalWare.        

 

 

 

 

 

Doing Projections in SurvivalWare – Part 5: Other Cash Flow

This is part 5 of a 5 part series on how to create a cash flow projection using SurvivalWare and the generic financial model that comes with it.

1. Getting familiar with the Forecast Tool
2. Sales and Expenses
3. Debt Service and Investment
4. Working Capital
5. Other Cash Flow

Other Cash Flow

What happens in a financial projection model is that you use various techniques to forecast each and every item on the Income Statement and Balance Sheet (except for cash). The model figures out what the level of cash has to be each month in order for the balance sheet to be in balance. The integrity of the model is kept intact by calculating two checks:

(1) Is the balance sheet in balance? (i.e. Total Assets = Total Liabilities and Equity)

(2) Is your ending cash balance each month consistent with the beginning cash balance and Net Cash Flow?

In the previous sections, we have forecasted all the income and expense items for the Income Statement, and the major items on the balance sheet (Accounts Receivable, Inventory, Accounts Payable, Debt, and Fixed Assets). This last section ties up the loose ends by giving us an opportunity to forecast what happens to the minor players on the balance sheet.

Most of the items in this section are of the type “Incr/(Decr)” or “(Incr)/Decr.” Most accountants will recognize these terms from traditional Cash Flow statements.

Incr is an abbreviation for “Increase.”

Decr is an abbreviation for “Decrease.”

The parentheses are used to indicate what type of cash flow occurs when there is an Increase or Decrease.

“Incr/(Decr)” means that this line item is calculated as a POSITIVE number where there is an increase in the underlying account from one month to the next, and a NEGATIVE number when there is a decrease. Cash flow items associated with Liabilities fall into this category. Suppose for example that the balance of Customer Deposits jumps from $5,000 one month to $8,000 the following month. This is an Increase in a liability account of $3,000. “Incr/(Decr) – Customer Deposits” would show a positive value of $3,000 for that month. In real life this means that a customer has put down a deposit of $3,000 that month, and you now have the cash.

“(Incr)/Decr” means that this line item is calculated as a NEGATIVE number where there is an increase in the underlying account from one month to the next, and a POSTIVE number when there is a decrease. Cash flow items associated with Assets fall into this category. Say you have a Notes Receivable from a business partner of $12,000 as of the end of June. This means the business partner owes your company $12,000. If you advance another $5,000 in July, the balance owed will increase to $17,000. But because this consumes your cash, the $5,000 shows up as a NEGATIVE number when you look at a cash flow statement.

For the “Other Cash Flow” section of the cash flow projection, you enter the CHANGES to these balance sheet items as the way of forecasting the balance each month into the future. It is important to get the sign right. Positive cash flows (an increase in a Liability or a decrease in an Asset) are entered as positive numbers. Negative cash flows (a decrease in a Liability account or increase in an Asset) are entered as negative numbers.

When you enter numbers in this tab, you can quickly flip to the Balance Sheet tab to see the impact of your assumptions.

Of course, the first step is to eyeball what happened in the past.

In the sample data , notice that the account “Other Current Assets” just bounces around a bit, and you might see a change of $2,000 or $3,000 from one month to the next. Here is what it looks like on the Balance Sheet:

And here is the (Incr)/Decr calculated in the “Other Cash Flow” tab.

It seems reasonable to forecast no change in the account going forward unless you have some specific knowledge of some activity that will affect this account in the future.

There are times when accounts play a more prominent role in your total Cash Flow Projection.

If you are a software vendor who sells annual support contracts, or a publisher who sells prepaid subscriptions, you might find a lot of activity in the Deferred Revenue Liability account. If you sell a $12,000 support contract that covers a 12 month period, you would set up a liability (deferred revenue) of $12,000 – and reduce that amount by $1,000 per month as you perform the service. The corresponding cash flow item – “Incr/(Decr) Deferred Revenue” would show a positive change of $11,000 the first month (the $12,000 sales less the $1,000 recognized as revenue the first month), and then minus $1,000 per month for the following 11 months.

For the sample data we’ve been using in this projection, here are the items we forecast in the “Other Cash Flow” tab:

We’re planning a “Distribution to Owner” of $10,000 in August 2008. This is a payment not considered to be Salary, but is more like a dividend. Depending on your ownership structure and how you capitalized the business, you might have an “Owners Draw/Distribution” account in the equity section on the balance sheet. You can put money in or draw it out without tax consequences.

Separately, there is an asset account called “Loans to Shareholders.” By prior agreement, we’re lending an additional $2,000 each month to a key shareholder. This is a negative cash flow and is entered as -$2,000 in the line “(Incr)/Decr Loans to Shareholders” in each month.

Summary of Cash Flow

This is the combination of all the assumptions made in the other sections. Changes you make are instantly reflected here. The summary starts with the beginning cash balance, and adds each of the four major cash flows to get to the Ending Cash Balance. Note that Ending Cash is projected to be negative in July and August. And of course, Beginning Cash Balance is equal to the prior month’s Ending Cash Balance.

Note: EBITDA is Earnings before Interest, Taxes, Depreciation, and Amortization – and is basically the same as Operating Income.

This is how it looks graphically:

There is also a “Cash Flow Balance Check” section to make sure the model is in balance.

When you see “POM” in the variable names, it stands for “Peace of Mind” – the cash flow schedule that Philip Campbell talks about in his book, Never Run Out of Cash. The SurvivalWare model calculates two cash flow formats:

· The “Peace of Mind” Schedule

· A Traditional Cash Flow statement

The line item “Ending Cash Balance – POM” is the ending cash balance calculated when you add all the cash flows from the Peace of Mind schedule to the beginning cash balance. This should equal the Ending Cash Balance that appears on the Balance Sheet, and if it does the “Cash Flow Check” line will have all zeroes. If not, it probably means the balance sheet was out of balance in the last historical month.

At this point, you can go back to any prior tab, and make changes – then come back to this tab to see the impact on you cash balance. You can also look at tabs that contain the projected “Income Statement” and “Balance Sheet” in the same format used for the historical statements. Use the menu item “File / Save” to save these projections. You can save them under a different file name if you want, and keep multiple scenarios.

Changing the planning horizon

The model allows for a total of 5 projected years beyond the current year. Within that planning horizon, you have the option of breaking next year into months, or forecasting it in total.

To switch the view to years, click on the “Years” radio button in the upper right.

Then you can use the “File” menu item to switch back and forth between forecasting next year (2009 in this case) as Months or Years.

Doing Projections in SurvivalWare – Part 4: Working Capital

Fluctuations in Working Capital can be the source of a major disconnect between profits and cash flow. This article covers how to analyze what has happened in the past, and how to use that knowledge to forecast Working Capital in the future.

This is part 4 of a 5 part series on how to create a cash flow projection using SurvivalWare and the generic financial model that comes with it.

1. Getting familiar with the Forecast Tool
2. Sales and Expenses
3. Debt Service and Investment
4. Working Capital
5. Other Cash Flow

Working Capital

In this section of the model, you’ll find out just how sensitive your cash is to your ability to collect receivables and control inventory turnover.

You can forecast Accounts Receivable (A/R) based on Days Sales Outstanding, or override the forecast in any month with a dollar amount.

The same is true for Inventory and Accounts Payable.

The first step is to see how you have performed in the past.

History

A/R (Accounts Receivable) Days

You might see the term DSO (Days Sales Outstanding), or even Collection Period used interchangeably with A/R Days.

DSO is easy to calculate based on the A/R balance and recent sales history. A true collection period would be very difficult because it would require an analysis of all invoiced sales and how long it took for the customers to pay. What makes that calculation even more difficult is having to decide how to treat open invoices. Does excluding them bias the calculation? If you include them, what value do you assign for how long it took to collect them? Also, do you weight them by invoice amount?

DSO is an approximation of collection period, and works well in a projection model. Here is how the monthly DSO is calculated in SurvivalWare:

1. For each month, take the ending A/R Balance

2. Divide by average daily Sales

You compute the average daily sales based on the last 3 months of sales to smooth things out. To do this, take the last 3 months of sales, multiply by 4 to get an annualized number, then divide by 365 to get a daily number.

Example – numbers needed to calculate A/R Days for June:

This is how it is presented in SurvivalWare’s DataViewer after you do a drilldown on “Days of Sales in A/R”:

Doing Projections in SurvivalWare – Part 3: Debt Service and Investment

Two key components of your cash flow are 1) what happens to your debt (new borrowings, repayments, interest) and 2) spending money on stuff that doesn’t show up on the income statement right away (Investment / Capital Expenditures).

This is part 3 of a 5 part series on how to create a cash flow projection using SurvivalWare and the generic financial model that comes with it.

1. Getting familiar with the Forecast Tool
2. Sales and Expenses
3. Debt Service and Investment
4. Working Capital
5. Other Cash Flow

Debt Service

There is where you put assumptions about new borrowings, principal repayments, and interest payments.

You may not separate the interest expense out on your books by category of debt. I’ve seen a lot of companies with one interest expense account on the Income Statement, but then maybe 5 or 6 loan accounts on the Balance Sheet. If this is the case, the model won’t calculate a good historical interest rate for you. You’ll have to estimate what it is for each category of debt; or just calculate one rate overall and use that same rate for all categories.

Borrowings are entered as POSITIVE NUMBERS.

Principal repayments are entered as NEGATIVE NUMBERS.

Interest is entered as an ANNUAL INTEREST RATE for each category of debt.

Example – Credit Card Debt

If you plan to pay off $5,000 in credit card debt in July, 2008: click on that cell, enter -5000.

After you hit ENTER, the value is accepted by the grid, and the model updates the calculated values such as “(Princ Repay) – Total”, “Credit Card Debt – Balance”, and “Total Debt.”

Scroll down a little more to enter the “Interest Rate” for your credit card debt. Typing an asterisk (*) before the number indicates you want to use the same number for all remaining months.

The Interest Rate is entered as an annual percentage rate. You should use a whole number (e.g. 23.99 not 0.2399 to indicate 23.99%). The model divides by 12, and applies this monthly rate to the prior month’s ending balance to compute Interest Expense for each month.

Investment / Capital Expenditures

This is where you enter planned capital expenditures such as Equipment or Vehicles. You also need to enter the depreciation roll-off for your existing fixed assets.

Here is an example of a $20,000 equipment purchase in July 2008. We type the number “20,000” in the “5 Yr Life” category. The model calculates the “Cash Flow from Investments” as a negative number (a cash outflow), and shows the impact on Depreciation and Net Fixed Assets as you scroll down.

If you are leasing the equipment, you would skip this section and just enter the lease payments in one of the Expense categories. (There are 5 “Other Expense” line items at the send of the expense section for this purpose).

If you are borrowing some or all of the money, you would enter the purchase price in this section in the month of purchase, and then enter the amount borrowed as a positive number in the Debt Service section.

Doing Projections in SurvivalWare – Part 2: Sales and Expenses

The first step in putting together a complete financial projection is to forecast Sales and Expenses.

This is part 2 of a 5 part series on how to create a cash flow projection using SurvivalWare and the generic financial model that comes with it.

1. Getting familiar with the Forecast Tool
2. Sales and Expenses
3. Debt Service and Investment
4. Working Capital
5. Other Cash Flow

You can forecast Sales by product line, or just Sales in total – whichever you feel more comfortable with.

For other line items, sometimes you will be forecasting rates or percentages instead of dollar amounts. Gross margin is an example of this, as is Payroll tax %. You’ll find that the rate has been calculated for you in the history time periods, so you can see what it has been before deciding what to use going forward.

Sales

If you’ve got two full years of history, and your sales are the least bit seasonal, I would start with a seasonal forecast. You have the option of forecasting each of 10 product lines separately, or entering one overall sales forecast. Unless you have good records on the gross margins of each of the separate product lines, I would just forecast the total.

Here is some actual sales history from a lawn mowing business based in the Northeast U.S. As you might expect, it is highly seasonal.

This is what it takes to do a seasonal forecast using the Forecast Tool:

And this is what the seasonal forecast looks like:

Expenses

Some overhead items such as rent or salaries you’ll know the number and want to enter it by hand. Others you’ll want to use the forecast tool to project a percentage increase over last year, or just use the year to date average.

Here’s a way to say “use the same values as last year.” Mark a bunch of expense lines, and click on the Forecast Tool icon. Then click “Last Year + X%” and leave X at 0%.

There are four special line items in the list of operating expenses that are calculated based on percentages:

• Benefits
• Commissions
• Payroll Taxes
• Royalties

Benefits

Sometimes benefits are fixed (e.g. health insurance), and sometimes they are better estimated as a percentage of total salaries and wages – e.g. 401k contributions. If you enter a percentage on the Benefits % line, the percentage takes precedence. The percentage is applied to Total Wages and Salaries, which is the sum of Salaries (Officers and Other), Commissions, and Bonuses.

You can override that by entering zero for the percentage, and keying in dollar amounts (or applying the Forecast Tool) directly on the Benefits line.

Commissions

The percentage is applied to total sales to compute commission dollars.

Payroll taxes

This is the employer share of FICA in the U.S., and in theory should be 7.65% of total salaries and wages (the sum of Salaries, Commissions, and Bonuses). Toward the end of the year, this percentage may come down if you have employees surpass the Social Security limit of $100,000 in earnings for 2008.

Royalties

This is for franchise businesses who must pay a percentage of sales to a franchisor. The percentage is applied to Total Sales. If you don’t pay royalties, just leave the percentage at zero.

The result of all this is a projection of Operating Income, which is where most people stop, but which is just one of four major components of cash flow.