The financial plan is a crucial element of business planning, especially if you want to convince investors or creditors of your business idea. However, there are certain essential criteria that a good financial plan should fulfill in order to be convincing and address all potential financial risks:

1. A good financial plan is understandable. It should be clear and easy to understand at first glance, even for external observers. A financial plan is not "high mathematics" that only the author understands. The more complicated the plan is, the less interest potential investors will show. Ideally, it should be possible to understand within 1-2 minutes how the plan is structured and whether the planned business can be profitable. If you fail here, this could mean the failure of the entire business plan.

To test the comprehensibility of your financial plan, you should open it again about a week after you have created it. If you can still understand the origin and meaning of every single figure, you are on the right track. However, if you are no longer able to understand your own financial plan after a certain period of time, this is a clear sign that there is a problem with the "comprehensibility" of your plan.  

2. A good financial plan is dynamic. This means that it can change quickly over time and allows the owner and potential investors to simulate different scenarios quickly and without major adjustments. This is only possible with the help of specialized software such as Excel. Only a dynamic financial plan can become an extremely effective tool for the entrepreneur who needs to react quickly to changes in business planning. It is extremely time-consuming to create a completely new financial plan every time just one or two components change.

3. A good financial plan is realistic. An annual doubling of turnover, too high profit margin or too low personnel costs are signs that your financial plan is most likely unrealistic. An overly optimistic presentation in the figures can lead to many additional questions from investors. You should be prepared to defend your financial plan. Especially when planning sales prices and turnover, many budding entrepreneurs encounter difficulties in justifying the figures plausibly. Figures based on "gut feeling" should be avoided, as investors should be able to trust the sources of information in your financial plan. Use the industry-standard figures that can be found on specialized websites or conduct your own local market research.

The entrepreneur's personal situation should also be presented in the financial plan to show that you can make a good living from your business in the future. Knowing the future tax burden is also essential for any budding entrepreneur. Also show that you have thought about all possible expenses and are prepared for all eventualities.   

If your financial plan meets the above criteria, you can be pretty sure that you will have a good chance with potential investors. For inspiration, you can download my template for a financial plan for a sole entrepreneur here.

            If you need help with the preparation of your business plan incl. financial plan, please contact me now! 

In today's world, managers are overwhelmed by a flood of information about AI. It is clear that AI will impact various business processes, and finance is no exception. In the following summary, you will get an overview of how AI can be used in different finance departments of a company.

1. Accounting

o   Accounting data from unstructured text. A common problem in accounting are documents with a format or structure that prevents automatic posting. By simply copying the document into ChatGPT and requesting "Create a CSV file with the following columns from the text", users receive structured data in the desired format. Certain AI tools specialize in processing certain types of documents, such as receipts, and execute posting transactions by processing photos of the documents.

o   Accounts payable and accounts receivable. AI extracts data from invoices, verifies invoices and manages the approval process. The automatic allocation of bank payments to individual invoices is also possible. While large companies have recognized the potential for automation in this area for years, AI now makes it possible to integrate all steps into an automated chain, leaving the accountant responsible for monitoring and control.

o   Account reconciliation with business partners. AI-supported chatbots can partially or fully automate the process of reconciling accounts with debtors or creditors, while personal contact remains necessary only in exceptional cases.

2. Controlling

o   Budgeting, forecasting, reporting. The use of AI offers enormous potential in this area. AI can take over the creation of reports, forecasts and budgets in real time, as the automation of processes in the company generates a large amount of data that can be analyzed by AI. An important task for a CFO is to identify the data areas that are best suited for AI, or to set an ambitious goal of completely eliminating the manual creation of controlling reports.

o   Analyzing investment decisions. Certain AI tools can assist in the comparative analysis of investment opportunities in order to make well-founded decisions. Analyzing the stock market is also possible today with AI.

o   Excel know-how. ChatGPT can significantly improve Excel reports by providing ready-made VBA codes or customizing formulas.

3. Audit

o   Preparation for financial and compliance audits. AI can take over certain records and audit trails to help identify data anomalies that could indicate errors or financial fraud.

4. Office communications

o   Emails. AI can capture, reply to or summarize emails to keep the inbox under control.

o   Internal policies. Employees can use a corporate chatbot to quickly access specific internal policies instead of searching for them on the intranet.

         The above examples illustrate that CFOs and finance managers should also keep an eye on AI to keep up with the times. 

It is common for small and medium-sized companies to hire a tax consultant for all their accounting and tax needs. Recently, however, I have been receiving more and more inquiries from entrepreneurs who are struggling to find a tax firm that not only handles tax statements and annual financial reports, but also day-to-day bookkeeping. The reason for this is the same as in many other sectors: a shortage of specialists.

According to the German Federal Chamber of Tax Consultants (BStBK), the average age of tax consultants in 2023 is 54. Over 30% of all tax advisors in Germany are older than 61. At the same time, the number of tax advisors has only grown by an average of 1.9% in the last three years. Many tax advisors combine their tax advisory services with legal advice and auditing, which makes access to tax advice even more difficult for small and medium-sized companies.

For this reason, many tax advisors cooperate with accounting firms that take over the day-to-day bookkeeping for companies. This cooperation makes it much easier for the tax consultant to prepare tax statements and financial reports. The accounting office coordinates its work with the tax advisor and acts as a point of contact for entrepreneurs in all accounting matters.

In terms of costs, working with a freelance accountant is no more expensive than working with a tax consultant. In fact, this cooperation can often be more cost-efficient, as it makes optimal use of resources while ensuring the quality of the bookkeeping.

Are you a self-employed entrepreneur desperately looking for a new tax advisor? Here are 6 steps that can help self-employed entrepreneurs get through such crises and overcome the time without a tax advisor with no negative consequences:

1.  Ask for all documents from the old tax consultant. This includes not only the submitted tax statements, but also accounting evaluations such as BWA, lists of totals and balances, asset and account lists. These documents will ensure a smooth transition to a new tax advisor.

2.  Get access to Elster. The Elster online portal of the tax office offers the option of submitting tax statements digitally. Registration is simple and self-explaining. After registration you will receive a certificate file that you can use to log in to the Elster portal. This file can also be connected with almost all accounting software solutions if you decide to do your own bookkeeping.

3.  Open a separate business bank account. A bank statement is an important document for determining business income and expenses and for reconciliation. Ensuring that you have a receipt for every transaction in the business bank account (contract, invoice, receipt, etc.) at the end of each month will ensure that your records are complete and can be processed more quickly by a tax advisor or accountant. Mixed bank accounts for private and business make this process more difficult and lead to additional consultations with the new tax advisor.

4.  Archive your receipts digitally in cloud storage. A clear folder structure in cloud storage enables efficient collaboration with accountants and tax advisors regardless of location, which makes you more attractive as a customer.

5.  Install a digital cash desk. Digital cash desk solutions offer significant advantages over traditional cash desks. Seamless cash management is automatically guaranteed and digital sales reports allow you to quickly calculate sales including VAT. Make sure that the provider you choose meets the legal requirements.

6.  Cooperate with an accountant. Many self-employed accountants work with tax firms and can help you prepare your receipts for the annual financial statements. This will increase your chances of getting access to a good tax advisor.

Cash flow is the lifeblood of any company. No business can survive without a steady flow of cash. A well-planned cash flow protects against unpleasant surprises and allows bills to be paid on time and investments to be made.

A positive cash flow means that more money flows into the company than goes out. With a negative cash flow, on the other hand, the company can quickly get into difficulties. Suppliers could become impatient and demand payment. Employees expect their salary on time. Unexpected expenses can also suddenly arise. Without sufficient liquidity, this can quickly become a problem.

Some entrepreneurs believe that making a profit is enough. But profits alone do not guarantee a positive cash flow. It can take months for a customer to pay an invoice. During this time, invoices still need to be paid. That's why it's important to regularly review and plan your cash flow. Solid financial planning can prevent many problems in advance.

Another benefit of a positive cash flow is credit rating. Banks and investors see this as a sign of a well-managed company. It becomes easier to obtain loans or attract investors. Suppliers also prefer to grant longer payment terms if they know that the company is solvent.

To improve cash flow, businesses should consider several strategies. These include:

   - Quickly issuing invoices and clearly communicating payment terms

   - Reminders should be sent out in time. Offering discounts can also motivate customers to pay quickly.

   - At the same time, expenses should be planned carefully and unnecessary costs avoided. A regular financial check helps to maintain an overview.

   - Suppliers' payment terms should be renegotiated regularly to slow down cash outflows.

Digitalization can also provide support. Accounting and banking software often offer functions that monitor cash flow. Automatic reminders and analysis are also useful tools. It is worth investing in such technologies.