 Zero accounting software, budget and financial performance reports. Get ready to be an office hero with zero. Here we are in our custom zero homepage. We set up in a prior presentation, scrolling in a bit, holding down control up on the scroll wheel currently at 175% zoom in. We're going into the demo company, but selecting the reset button, which will reset the data and open the demo at the same time. We're going to be duplicating some tabs to put reports in as we have done every time. This is the setup process. Right-clicking the tab up top, duplicating it. Right-clicking the duplicated tab, duplicating it again in the middle tab. Accounting drop down. And we want the balance sheet. As that's thinking, we're going to tab to the right and skip to the loo and then go to the accounting drop down. And we want to go to the income statement, profit and loss, P&L. Back to the tab to the left, changing the date, bringing it up to the custom date of 2022, end of the month and update. That's the setup process we have been doing every time. These are the major two financial statement reports. Now we've been looking at other reports, most of which tie into one line item or multiple line items on these financial statements. This time, however, we're going to be looking at budget and performance reports that are a little bit different in nature. So let's go to the tab to the right, right-click on it and duplicate this tab to see the reports we're going to be working with. And the accounting drop down, we have the reports. And we're going to go down now and look at the financial performance reports. Now note when you want to keep in your mind separate the kind of bookkeeping work, the financial report generation work, the accounting work versus the projection work out into the future. Analysis of the financial statement in other words for projections, predictions into the future to help us with decision-making processes. As a bookkeeper, as someone in the accounting department, our typical goal is to take the financial transactions, which are typically going to be facilitated with these forms, or these are going to be the forms we use to record them, and enter the data into the system to create the financial statements, balance sheet income statement, and related reports based on past data. That's what we're there to do so that the data is in place and can be used for whatever we need to use it for, such as taxes at the end of the year if you're in the United States income taxes and reporting purposes and so on from that perspective. Once we have the financial statements, then we can use of course the financial statements to make projections out into the future. Analyze the financial statement, think about the health of the company based on the financial statements. That's usually something that's not exactly falling in within the accounting department area because we're here to do the prior data, but it's related because of course we're using the foundational tools past history in the format of financial statement reports. In other words, to judge the health of the company based on and make projections and budgets out into the future. It's important to make those distinctions because if you're working in an accounting office or doing bookkeeping for a business, then you want the person to be able to know that you're working for that, hey look, the accounting department is involved in these other things, but we don't have the information in and of ourselves if we're not managing the business in order to put together some of these other kind of tools because we need to know more about the business to know why, say, financial ratios are the way they are or why you might change the budget going forward, not just based on the past year's data in order to make an accurate budget in the future that can be useful for decision making. Okay, so that said, we're looking at these kind of items that are kind of outside the realm of normal bookkeeping and accounting, although bookkeeping and accounting skills are necessary to create them. Also, you're going to need management kind of skills to interpret these kind of reports. So we've got the analytics. This is a nice kind of graphic tool that you don't see in a lot of other accounting software. You've got the analytics short term cash flow. You got the budget manager. So these are the ones that are going to be budgeting out into the future, creating the budget here. You got the budget summary and you got the budget variance. You got the business performance, cash summary, executive summary and the tracking summary. So let's just go through a few of these. If I go into the analytics here, we won't go into them in a lot of detail, but these are some nice tools you don't see in some other accounting software. It's giving you some more of this kind of analytical tool rather than just the accounting stuff. So we've got the dropdown last month, last quarter, year to date. They've got some pictorial items up top, profit and loss. You got the percent from January to December down the income. So they give you some nice graphical viewpoints of it. The net profit margin, which is a key metric, some of these key metrics that are pulling up and giving us comparative data, gross profit margins, largest operating expenses. So they're kind of pulling out for us, doing some of that analytical work and saying, hey, here are your biggest operating expenses and here's the changes that you've seen within them. So it's a nice quick, nice glance view of it. Financial position, you got your balance sheet, assets, liabilities, equity. That's basically your balance sheet accounts, but they're giving you a nice summary total of it. Overall cash balance is at a negative average time to get paid. How long does it take for us to collect on our receivables? In other words, which is a common kind of ratio analysis type of tool to see how efficient we are at turning over our receivables, collecting on our receivables that we can then compare to prior periods and to industry standards. And then average time to pay suppliers, similar thing, how long does it take us to pay the supplier? So some nice quick analytical tools that are being basically calculated for us. Let's go back to the reports. Let's look at the short-term cash flow tool, another pretty neat tool that you don't see in a lot of other accounting software. Note that if you're on an accrual basis, meaning if I go back to my flow chart here on the vendor side, if you're just paying the vendors with electronic transfers, writing a check, for example, you're kind of on a cash-based system. But if you're entering a bill, then you're on an accrual-based system where you have to manage the accrual-ness of it, as well as possibly the cash flow, because cash flow is also going to be important. On the revenue side, if you're just recording revenue when you get the money in the bank, you're on a cash-based system. But if you're entering receivables, you have an accrual component, and then the question is, can I predict what my cash flow will be in the future based on when the receivables are going to become in due and the payables are becoming due? So they've got a pretty nice simple tool for doing that. So short-term cash flow projection. So view your future bank balance based on invoices and bills. Invoices and bills being the accrual components. Receivables we have not yet received. Payables we have not yet paid. Predicting when we are going to receive and pay them in the future. Adjusting the cash flow based on that. So view your projected bank balance based on invoices being paid and paying your bills. Include that bank account can be changed at any time. So we're going to say checking account. And then projection applies to you got 30 days, 7 days. Let's go for 30 days out. If I have my current data and go 30 days out, we have our item limited functionality of short-term cash flows features that are included in the analytics. Plus version of short-term cash flow are not available in the demo. So they're giving us a little warning there. But you got the total invoices owed to you. Total bills to pay projected in balance is now at the 6731. It's worse than it was before we were already overdrawn. So it gives you a nice little projection tool. Projection breakdown gives you a little bit of an overview of the tool. So if you're using a cruel accounting, that can give you a little bit of a projection tool to try to measure what your cash will be based on the account outstanding receivables and payables. I'm going to go back on over and close this one out. Now let's look at these three which are kind of connected together. The budget manager, the budget summary and the variance. The budget manager right-clicking open in this report is the tool we use to create the budget. So if I go in here, we've got the overall budget. We might go into budgets in more detail in the future. But to create the budget, you typically look at prior year data and then use that as the baseline to then create the future budget. But then you want to also include changes that you're going to have. Are you going to do more advertising? Are you going to change up how many employees you have and what not? And how is that going to affect your revenue and so on? So that's why you need management to help out with the budget, not just past data. So in the default here, we've got the overall budget. And then we've got January 2023. It shows the last three months. So oftentimes it's useful to look at the actual data for the prior period because that might be your starting point for the current period. And then you've got the periods that are included three months, six months, 12 months, 24 months. So you might be doing like a yearly budget is fairly common. Maybe you don't want to see the actual numbers so you can remove the actual numbers and then update it. So now you've got your data input so you can put your data input here. It's got some already filled out. If I put a thousand here, for example, you could copy it across this way or you could increase it by dollar amount or percent. I'll just apply it across. There's the thousand dollars. You got your scroll bar down here that you could scroll across. You have a bit wider view up top as you enter the data. Now note that these budgets, first of all, are only for the income statement, which is typically the statement you're thinking about when doing a budget because that's the performance statement. But if you get more detailed budgets, then you would have a balance sheet where you expect to be at a future point and we don't have that capacity here, which is also not available oftentimes for many other accounting softwares for the budgeting component of it. Also note that you basically have to fill out the entire budget here. So you've basically got all of your accounts in the income statement. You have, in essence, an income statement with all the accounts on the general ledger for it and then we're going to populate the budget. So how would you do that in practice? Well, typically you would look at the prior year budget, possibly export the income statement from the prior year and take that information divided by 12 maybe as your starting point for your monthly budget on a line by line item. And then you would adjust it for what you think is going to change in the future based on what you're going to do, advertising changes, changes in the business model, changes in hiring and so on and so forth. And then you would want to import the budget back into the system here or just to the data input. And the reason you want it in zero is so that you could do budget versus actual type of reports and run budget reports. So the point of having it in here and not just simply in Excel is you have the capacity to run reports although getting the information into the budget like with any kind of accounting software is a tedious process. Now to make that a little bit quicker, you could export like a template here or export your current budget and then try to import it back into the system so that you can actually create the budget in Excel in the format that it's going to come back into the system as and then it should make the importing process easy. So that might be an easy way to do it but typically the actual creation of the budget might happen outside of the zero system. And then of course you could save the budget and then you can view the budget report from here or I can go to my budget report over here. Now before I do that also note you do have the capacity to make other budgets but this one is the overall budget. So that's like the main budget that will be defaulting to use when we create the variance reports. So that's important to know but if you do make another budget like I make another budget instead just call it a test budget and then I'm going to save that here and then I'll enter some just like 500 here and copy that across and then let's say 600 here and I'll copy that across. So now we've got another budget I'm going to save it and so now you've got and then I just click the budget summary so I went to the budget summary I'm going to go back but now you've got that information so now you've got two budgets here you've got the overall and the test but the overall is going to be the main budget so now if I go back to the report manager and I open up the budget summary right-click budget summary then we've got the two budgets so I've got my overall and my test budget I've got the period of one month and 12 periods so I'll keep that and so down here now you've got your information in summary you've got your nice little summary report of the budget so that's nice and then down here of course you can publish it you can export it and save it as a draft let's go ahead and publish it for the fun of it so now we've published it save as a draft export I'm going to publish it okay boom there it is and so now if I go back to the reports now I can look at the variance report now as time actually passes we can basically compare what we budgeted to happen versus what actually happened but this one is based on as you can see the main budget the company budget so I can't really change it to the test budget that easily although I could do a layout change down here so now you've got now you've got your December 2022 December 2022 overall budget the variance the change the down arrow given the indication of good or bad change the percent change and 2022 2022 overall budget and the variance so this is going to be one of the key components the reason why you might enter a budget into the system is that you can do these comparative type of budgets as time passes which are a great tool to see you know how close you were to the budget and then make your adjustments going forward now if you wanted to like tie it out to one of the other budget lines you can modify this report using the edit layout down here and so if I wanted to add like a column on this and I wanted to use my budget and then I wanted to add my test budget then you can do that and then you can do your variance from the test budget right so if I update this one then it's going to give me my test budget on the right the one that we just created with the 500 and the 600 in it and then I can create my variance report based on that by comparing it to the actual and so on so it doesn't give you by default the variance for all of your other reports but it gives you the capacity to do so you also have your filtering options as we saw so if you're trying to filter by region then you can filter the actual data by region and compare that to your budget that you put together say by region for example which is kind of a fancy neat thing but it takes a little bit more customization so we might dive into the budget a little bit more in a future presentation let's just take a quick look at some of these other ones we've got the business performance one so if I drill into the business performance it's a pretty neat tool because now this one's going to give us some kind of ratio analysis and some of the ratio analysis can be automated so once we have the financial statements created from an analytical standpoint we often look at different ratios common ratios so track the health of your business with these financial ratios discuss goals and what's best for your business with your advisors the figures that make up these graphs may differ slightly from the balance sheet due to multi currency fluctuations these graphs use the exchange rate so we don't have any exchange rates going on but in any case these are this is the kind of stuff that usually is not really done within accounting software but other analytical software would be used when trying to analyze the health of the company and have this in the accounting software it's pretty neat feature so you got the current liabilities to net worth you've got the current ratio you've got the debt ratio debt to equity ratio fixed asset to net worth ratio gross profit percent net profit on net sales percent and the working capital total assets percent so and then you've got add remove or rearrange items so we've got the rearranging of the items here so this is a pretty pretty neat tool that it gives you some of those ratios I won't go into that in a whole lot of detail because this is an accounting kind of centered course rather than an analysis type of course but these are common ratios to help you with the health of the company and it's pretty neat that they you know provide those within the accounting software helping you out to and that might help you keep it a kind of construct a report that you might provide to someone say at the end of the month or the end of the year that's more detailed not just with the accounting stuff but also with some of this kind of more analytical stuff so cash summary if we go into the cash summary let's check that one out I'll change the date up top and we'll bring it up to let's say this fiscal year I'll say and so there we have it so you got 2022 you got the sales less the expenses plus other cash activity so we're focusing on the cash flows plus sales tax activity and then the summary and then we're comparing that to the yearly average on the year to date and then the variance and the change with it and then we can filter here we've got our filtering options that we have seen and we've got the comparison over here which I could just say none or to a year let's go like a year and so now we've got 2022 and 2021 and so and I could remove that altogether so this looks like another kind of format of like a cash flow type of analysis kind of like a statement of cash flows or an income statement on a cash basis in essence 22227 2022 comparing that to the income statement the income statement showing the 30,623 which I assume is the accrual versus the income if I change the basis over here just out of curiosity to a cash basis and update it we've got here then there's the 22227 86 which is is that what we had over here report this is 2222 so it's kind of like an income statement on the cash basis so interesting let's go back on over not a report you see all the time and a lot of accounting software executive summary let's take a quick glance at that one so we've got the year to the month of 2022 compare with the prior month or an average we've got our filtering options up top and then we've got the cash so we got December versus the prior period and the change so you've got a nice little change capacity here for that profitability so it's taking some key figures to income direct cause gross profit other income and then balance sheet debtors creditors sales so it's giving us kind of an overview type of report so some pulling out some key numbers if I compare to the average let's just check that one out so this could be like a nice like overview type of performance report that pulls out some key figures so let's pull that back on over and let's just look at the last here the tracking summary so this is giving us information for the date range I'm choosing the bank account and then we've got our region up here so we're tracking by the regions that we set up which would only be applicable if you had those kind of categories set up so now it's giving our information by region so it's kind of a need if you have those kind of regions kind of set up that it could it could break this stuff out in that format so that could be a useful report although more specialized so once again just a summary of this remember that accounting in and of itself is going to be based on prior data the creation of the financial statements based on prior data and then projecting out into the future budgets to do that as well as analysis of the past data when we try to make analysis or why the past data is the way it is means that we often are going to have to need management to help us out with that we could do things like these ratio analysis and as a bookkeeper you can provide those and that's great but that's only the first step to really say well why are the ratios like that then you're supposed then you want to dig into the analysis of it which means you would need management with that with the budgets you can't just base the future on the past that's the starting point oftentimes but then you have to think about what's going to change in the future why for that of course you need management as well as the accountant the accountant knowing how to put these numbers together and put it into the system management is going to help out to make the determination on the changing factors for the decision making purposes in going into the future