Nicolas Boucher on LinkedIn: Accounting explained to kids Do you have kids? Here is how you can… | 96 comments (2024)

Tech + AI + CFO RoleTechnology is changing the finance function and the role of CFOThis Monday (16 September), I am speaking at a free virtual event on this topic.We will give you insights on how to use AI in Finance.Register here: https://lnkd.in/e8qf6jpW(sponsored by Moss)Let me help you navigate in this changes:1. Automated Financial ProcessesCFOs are now responsible for overseeing these processes & ensuring that they are functioning effectively.Practical Tip: Automation Efficiency• Use PowerQuery, RPAs and Python to streamline accounting, reporting & budgeting – freeing up valuable time for strategic oversight.2. Real-Time Financial ReportingAccessing real-time financial data is allowing CFOs to make better and faster informed decisions.Practical Tip: Cloud & API• Get a cloud based solution with APIs and interface with other data sources to allow for dashboarding with financial and non financial data.3. Data AnalyticsA business intelligence tool like PowerBI can help CFOs identifying financial trends & outliers, drilling down into details & have dynamic dashboards for management meetings.Practical Tip: Start using PowerBI• PowerBI is the number one BI tool. It has the advantage to be easy to use, connected with Microsoft tools & you can find easily learning materials and staff to use it.4. CybersecurityCFO needs to review with their IT team & risk management team how to secure the financial information.Practical Tip: Cybersecurity hot topics• Three hot topics to be aware of: payment fraud / leakage of financial data / social engineering. Train yourself & your team on this but also make sure to stay updated.5. Integration of Financial SystemsCFOs need to use their position & influence to align IT projects between functions and avoid silos inside the company.Connecting non financial data with financial data will allow the creation of new business insights.Practical Tip: Harmonized Systems• Oversee seamless integration of financial systems, elevating process accuracy & efficiency.6. AI for Advanced Financial Insights1) Use LLMs platform like ChatGPT or Bard to increase the productivity of your team2) Implement AI in your forecasting by feeding historical data & external data to calculate your forecast3) Start your secured LLM and feed it with your historical data & policiesPractical Tip: Train your teams on Python👉 Which topic do you think is the most important?

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CASHThey don't teach you how to manage Cash at schoolIs Cash is important for you?Do you want to know how AI can help you in your cash management?👉 I am inviting you to a free webinar:https://lnkd.in/eiwKes-wWhat's on the program1. Get an overview of the latest developments on AI in finance.2. Learn how to leverage AI for better decision-making and risk management.3. Gain insights into best practices for implementing AI solutions in financial operations.This webinar is sponsored by Agicap which will show us their New AI Assistant.Make sure to register!Cash Flows are divided in 3 types of activities:1. Operating ActivitiesCash in:-Money received from sales -Commission & Fees -Money received from other incomes-Royalties-SubventionsCash out:-Money paid for inventories-Money paid for expenses-Money paid for tax-Payment to creditors-Payment of wages2. Financing ActivitiesCash in:-Money received from issuing shares-Money received from obtaining loansCash out:-Money used for repaying loans-Company's stock repurchase-Cash dividend3.Investing ActivitiesCash in:-Money received from assets sales-Fixed deposits maturing-Sale of Investment Interest received-Dividend receivedCash out:-Acquisition of CAPEX-Buying properties-Investing in fixed deposits-Purchase of InvestmentsHere are the 9 levers you should use to improve your Cash Flow1. Accelerate Project Completion2. Automate Sales administration3. Improve Collection of overdues4. Optimize Inventory5. Make it a top priority for Management6. Teach the importance and engrain it in the Company Culture7. Make Procurement focus on it too8. Sales should be your first ally to improve it9. Make it an objective for the whole Finance teamHow to manage Cash1. Create a cash flow forecastDevelop a cash flow forecast.Plan Cash In from Sales.Plan Cash Out from Expenses.2. Manage accounts receivableCollect outstanding payments from customers promptly and consider offering incentives for early payments.3. Control expensesControl expenses by setting budgets, monitoring spending, and reducing costs wherever possible.4. Manage accounts payableNegotiate longer payment terms with suppliers to improve cash flow and delay outflows of cash.5. Maintain adequate working capitalKeep a level of Cash reserves, secure lines of credit, or use factoring or invoice financing.6. Monitor cash flow regularlyMonitor cash flow on a regular basis to identify any potential problems and take corrective action early.👉 Share this work with your team !👉 Let me know if I missed anything

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EBITDA ExplainedWhat is EBITDA? Is it a good metric?EBITDA stands for:• Earnings• Before• Interest• Taxes• Depreciation• AmortizationIt's a financial metric that shows how much money a company makes before taking into account non-operational expenses like interest and taxes and non-cash expenses like depreciation and amortization.Why is EBITDA important for Businesses?EBITDA is important because it gives businesses an idea of how much money they're generating from their operations.This is useful for investors and lenders who want to know how profitable a company is.It’s like a scorecard to know how much money a company is making.How is EBITDA calculated?To calculate EBITDA, you need to start with a company's revenue and subtract its cost of goods sold.Then, you subtract its operating expenses (like salaries and rent).Another way to calculate it:Net Income+ Interest Expense+ Taxes+ Depreciation+ AmortizationEBITDA vs. Net IncomeEBITDA:In EBITDA, you don’t take into consideration these expenses: Depreciation, Taxes, Interest.Net Income:But the net income is what remains as actual profit after depreciation, interest, taxes are taken in account.👉 What is your take on EBITDA?📚 Download my finance cheat sheet here: https://lnkd.in/eCYCKDBN

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Discover my best Financial Modeling tips in this week's newsletter.Bonus: in this week's newsletter: two invitations to learn from me on how to use AI for Finance in my upcoming webinars!Read and share this newsletter here: 👇👇👇

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28 ways to use ChatGPT in FinanceI am on a mission to make Finance the champions...The champions of using AI in Business!How can you become a AI Champion?Let's start by joining me in a live virtual event organised by Moss on AI in Finance.It will be like a live TV Show episode where you can hear from two other experts:- Ahmad Haj Mosa, PhD (Director of AI at PwC and AI specialist with 15 years' experience)- Ferdinand "Micky" Meyer (Moss Co-Founder and ex-SaaS leader at BCG)👉 Register here: https://lnkd.in/enJxwYX9And you will hear from me too!I believe we can and should all start using GenerativeAI to improve our work.This is why I have made this infographic for you.You can see:4 ways it can help CFOs4 ways it can help AR & AP4 ways it can help budgeting teams4 ways it can help financial analysis teams4 ways it can help tax & compliance teams4 ways it can help accountant and controllers4 ways it can help internal & external audit teamsIf you want to finally know how to use AI in your Business, join us in my free webinar: https://lnkd.in/enJxwYX9

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10 Cost Reduction TacticsI have led many cost-reduction plans.Here are 10 ideas you can steal from my experience:1. BenchmarkCompare your overhead expenses to those of your industry peers or other units of your group.For example, Finance costs as a % of revenue, HR costs per employee, and procurement costs as a percentage of total purchase volume.2. Kill non-critical tasksIt’s hard for everybody to reduce 10% of costs if you still have the same workload.An efficient way to cut costs is to stop tasks and non-critical projects and tasks.3. Use natural attritionOnce you have reduced the tasks, you can use the planned departure to reallocate the resources and reduce your payroll costs.Natural attrition is the best opportunity a business has to challenge the statu-quo and rearrange its organization.4. Negotiate with your headquartersDon’t always accept the group recharges as a non-negotiable expense.Instead, review which services you use and either use them 100% without having any local costs or either invest locally and refuse to use and pay for the group services.5. Reduce management layersReduce the number of lines between an employee without management responsibility and the CEO.On top of reducing payroll costs, it should improve communication and empowerment.6. Increase your management spanIdentify a target of how many employees per manager on average should the organisation have.Challenge any team below this number.7. Trim external servicesLook at any consulting, license, or contractors and delay/reduce their services.8. Renegotiate framework agreementClassify your vendors by tiers and negotiate with the top ones for better agreement where you can both look at non-monetary benefits (time schedule, scope, sharing of knowledge…) which could help reduce costs.9. Reduce spaceWhen you reduce space you don’t only reduce the rent.You also reduce energy, heating, water, facility management costs, repairs…10. Use the Colibri effectDo you know the Colibri story?This is one of my favorite stories and life principles.The Colibri story is about a small bird that carried water in its beak to put out a forest fire.He was mocked by other animals.When they ask why is he even trying, his answer was: “At least I am doing something against the fire”.And then all animals started helping and soon the fire stopped.It teaches us that small efforts can make a big impact.Applying the Colibri effect to cost reduction means focusing on small changes and incremental improvements that can add up to significant savings over time.👉 What would you add?Do you know that 99% of you won’t like this post, comment on it or repost it?So I have a favor: can you help add a like or comment to this post?By doing so, more people of your network will see it.And it might help somebody who needs to see this post!🙏🏻🙏🏻🙏🏻And if you want to see more finance insights from me, just follow me ;)

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Top 22 Excel Formulas👉 Download the High-Resolution PDF:https://lnkd.in/eRzGJWie10x your productivity with these 22 Excel must-known formulas:1. SUMAdds all numbers in a range=SUM(A1:A9)Add values from cell A1 to A92. AVERAGECalculates the average of numbers in a range=AVERAGE(B1:B9)Average of B1 to B93. ROUNDRounds a number to a specified number of digits=ROUND(C1;2)Round C1 to 2 decimal places4. MINIdentifies the lowest number in a range=MIN(D1:D9)Find the minimum in D1 to D95. MAXFinds the highest number in a range=MAX(D1:D9)Get the maximum value in D1 to D96. COUNTCounts the number of cells that contain numbers=COUNT(F1:F9)Count numeric cells in F1 to F9*It only counts the numerical inputs7. INDEXReturns a value in table based on row & column number=INDEX(K1:L10,2,3)For the value in the 2nd row & 3rd column from the range K1:K108. MATCHSearches for a value and returns its relative position=MATCH(L1,M1:M9,0)To find L1's position from the range M1:M99. VLOOKUPSearches for a value in the first column of a range=VLOOKUP (G1,H1:H10,2,FALSE)To find G1 in H1:H1010. HLOOKUPSearches for a value in the top row of a table*Number of rows that contains the data you want to retrieve=HLOOKUP(I1,J1:S2,2,FALSE)To find I1 in the top row J1:S211. XLOOKUPFinds a value in one range & returns a result from another=XLOOKUP(A7,A2:A4,B2:C4)To find A7 in A2:A4 & return the corresponding value from B2:C4 if a match is found12. COUNTIF/COUNTIFSCounts cells that meet a condition=COUNTIF (N1:N9;">5")To count cells greater than 513. COUNTACounts non-empty cells=COUNTA(O1:O9)To count all non-empty cells in a range14. SUMIF / SUMIFSCounts non-empty cells=SUMIF(P1:P9,">5")Add cells that meet a condition15. IF / NESTED IFSPerforms conditional tests=IF(R1>5;"Yes";"No")For simple conditionsNote:IF: 1 variableIFS: multiple variables=IF(test, true, false)=IF(test1, true, IF(test2, true, false)Nested IF=IFS(test1, true, test2, true, test3, true)16. AVERAGEIF / AVERAGEIFSCalculates the average for cells that meet criteria=AVERAGEIF(Q1:Q9;">5")Average of values over 517. Logical Operators (AND, OR)Combines multiple conditions=AND(S1>5;S2<2)Both conditions are true => Output is true=OR(S1>5;S2<2)Just 1 condition is true => Output is true18. CONCATENATEJoins two or more text strings=CONCATENATE(T1," ",T2)Combine first name and last name in one cell19. LEFT/RIGHTExtracts characters from the start/end of a text string=LEFT(U1;5)Excel=RIGHT(U1;5)Class20. MIDExtracts characters from the middle of a text string=MID(V1;7;7)7 characters starting from the 7th => Mastery21. TEXTConverts a value to text in a specific number format=TEXT(V1;”MMM-YY")7/02/2024 => Feb-2422. IFERRRORReturns a custom result if a formula errors out=IFERROR(W1,"0")Give 0 as output, instead of "# div" error

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FIFO vs LIFOTwo different inventory accounting methods 1. What are the main differences?➡️ FIFO stands for First In First OutUnder FIFO, the oldest inventory items are sold first.⬅️ LIFO stands for Last In First OutUnder LIFO, the newest inventory items are sold first.2. What is the impact on financial statements?The choice of inventory accounting method can impact a company's profitability, tax liability, and inventory valuation.The choice of inventory accounting method also affects the accuracy of financial statements, as different methods can lead to different results for cost of goods sold and inventory valuation.For example, in an inflationary environment (prices are increasing), using FIFO will increase the value of stocks.While using LIFO will increase your COGS and decrease your income.3. Where is FIFO used?- Food industry: Restaurants, supermarkets, and food manufacturers use FIFO to maintain the quality and safety of their products.- Retail: Retailers use FIFO to manage perishable and non-perishable products, ensuring older stock is sold before newer stock.- Pharmaceuticals: For effective medication management and to prevent expiration, FIFO is used.- Warehousing & Distribution: To keep the inventory moving efficiently, FIFO is used.4. Where is LIFO used?- Manufacturing: Some industries use raw materials that don’t perish or become obsolete. LIFO is used here as the newest items might be easiest to reach.- Tax optimization: Particularly in the US, companies use LIFO for tax advantages during periods of inflation, as it reports higher cost of goods sold and lower profits5. Another alternative: the WACWAC, or Weighted Average Cost, averages the cost of all items in inventory.Its main advantage is simplicity and its ability to moderate price fluctuation effects. However, it can be unrealistic as it assumes all goods are identical.Compared to FIFO, WAC smooths out cost variations but may not accurately reflect the physical flow of goods, especially in industries dealing with perishable items.Compared to LIFO, WAC moderates cost figures and doesn't offer tax benefits during inflation.It doesn't mimic a specific physical flow of goods, making it less applicable when the newest inventory is sold first.6. ConclusionIn my manufacturing experience, we used WAC as it smoothen the difference in prices (coming from different suppliers, lot sizes & market conditions).But if you work in FMCG, you might want to look at FEFO:First Expiration First Out. It covers inventory management for perishable goods.You control goods by future expiration dates.As validity dates are getting closer, you have to move fast for delivering these perishable goods as soon as possible (Special thanks to Carlos Vinícius C. Ramos for contributing with this comment).👉 Which method would you choose?Free gift for you:Get your free KPI catalog100 KPIs in a high resolution PDF🔗 https://lnkd.in/ec-8Ecku

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