As an external finance department for startups and companies, one of our most important tasks at Danoy is to create an annual financial plan for our clients.
An annual financial plan is essentially the working plan for the upcoming year. Our financial experts understand the various needs of department managers, translate them into costs, and integrate them into a financial plan that applies to the entire company. Once approved by the CEO and the board of directors, department managers can operate according to it without needing approval for every planned expense.
However, life doesn’t always adhere to the plans we create, especially in business. Often, department managers encounter unexpected expenses, or sales don’t go as expected. And as we’ve learned in recent years, pandemics and wars can certainly erupt overnight and jeopardize the business’s very existence. What can we do in such cases?
We believe that as financial experts, we are measured when things don’t go as planned. We also operate on the assumption that there will always be surprises, and in most cases financial plans don’t materialize as written. Therefore, writing the plan is just the first step in a long process. To put it into action, we need to always monitor and compare reality to the plan, and to find real-time solutions.
The truth is that an annual financial plan shouldn’t be a signed and sealed document. It’s the other way around. A financial plan should be a dynamic working plan that can adapt to the ever-changing reality.
As an external finance department, after writing a financial plan for a client, we closely monitor the gaps between the plan’s expectations and the actual expenses and revenues. When we identify gaps, such as failing to meet revenue targets or unexpected expenses, we inform the company’s management and work to find solutions like identifying expenses to cut back, freezing recruitment, and more. We also need to be aware of influences that are not directly related to the company’s activities, such as fluctuations in the dollar exchange rate.
The way we create a financial plan and work with it continuously helps our clients to manage expenses throughout the year in a thoughtful and effective manner. If you also want us to create a financial plan for your company and track it continuously, contact us.