We are pleased to announce that we start publishing a series of helpful tips and add-ons. The first in the series is CapEx Advances Module. You can download it here free (requires registration). Alternatively, there is a new button ‘Add-ons’ at the top right of the user Account page. You can always browse FinRobot add-ons’ library as we will upload more in the nearest future. Download an add-on and follow the instructions in the file to import code into your Base Model.
Do you need this Module? From modelling perspective, it is easy to shift payment profile if you have one single investment. Just book required adjustment into other current assets and unwind the same amount at the time of item’s install date. However, if your business constantly prepays for various types of equipment, manual adjustments become tedious and messy. Various terms and amounts tend to overlap, creating a risk of phantom or not-existing accruals or negative balance sheet positions. The Module is designed to address these issues.
What does the Module do? The Module calculates working capital and cash flow impact from advances paid to suppliers of long term assets. Add-on CapEx Advances Account tracks all prepayments added and unwound during each forecast period. It allows to manipulate % of down payment and lead-time from payment to procurement / install date for each asset class. As your assumption or terms may change the Module would recalculate timing of cash outflows based on few input parameters.
How difficult is it to import the code? If you follow the instructions provided in the file, it should not take longer than 10-20 minutes of your time. No advance knowledge of Microsoft Excel is required. It is a simple copy-paste operation. Remember to keep a separate copy of your Model prior to changes to revert to if you make a mistake.
Finally, note that you need to have some understanding of basic accounting principles for accruals of advances. Do not import the module if you feel uncomfortable with its logic or feel it is not suited for circumstances of your business.
Enjoy!