A financial model is a business tool for compiling and analyzing financial data. The output of the financial model can be used for budgeting, as well as other things such as scenario analysis, inventory planning, pricing decisions, determining your optimal product mix, investor due diligence, and myriad additional business cases.
A budget is the output of your budget forecast financial model and represents your target expenses and revenues for a specific time period. You will use the budget to compare to your company’s actual Profit & Loss (P&L), and use this comparison as a learning to better understand your business’ financial levers and more accurately budget in the future.
What we will talk about is how the model, budget, and your accounting platform work together to provide insight into your business. Here are the steps we typically take when we work with clients to develop and review a model and the budget output of that model.
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