Finance
The finance template allows you to plan a budget for the future and record transactions as they happen. It doesn't have all the features of a fully-fledged double-accounting book-keeping system 😵 but maybe you don't need all of those.
It also allows you to model different scenarios for your financial projections, enabling you to visualise how your cashflow might pan out.
Transactions
A Transaction represents a transfer of money from one Account to another.
For example, if you are buying some raw materials using your credit card, you might create a transaction that looks like this:
Accounts
Accounts are the various sources or destinations for money transfer. The Balance on an account is the net sum of all executed incoming and outgoing Transaction amounts.
Accounts are allocated to a Category, and Categories can be nested.
The top level Categories will typically be
Assets / Liabilities, representing internal sources and destinations for transactions
Revenue / Expenditure, representing external sources and destinations.
The net balance of all the Accounts under Assets and Liabilities indicates whether you are in the black 🤑 or in the red 🥵.
The balances on the Accounts under Revenue and Expenditure indicate where the money has flowed from and to 🏃♂️💲
Reporting
The template contains a report with views of the Transactions that have been executed:
Modelling
There is always a degree of uncertainty when it comes to financial planning. To accommodate this, the template incorporates the concept of Scenarios.
Scenarios are optional, and can be used to represent different, alternative financial realities. For example, these could be 'Optimistic' vs 'Pessimistic', or maybe 'Slow burn' vs 'Rapid expansion'.
By linking Transactions to Scenarios, it is possible to model what different financial futures might look like. The two charts below represent two alternative realities for the bank account balance: a base case, and one where extra money was spent on salary but where the rate of increase in product sales was higher.
It looks like the 'ambitious' plan is promising in the long-term, but might require some borrowing on the credit card or taking out a loan 😬
