Frequently Asked Questions
While we are working to launch Trafic, we thought it may be helpful to address questions you may have. We have a blog that explains some of our thinking and approach that is primarily addressed for entrepreneurs and start-ups that may not be completley comfortable with cashflows, borrowing from banks, letters of credit and how to structure their capital structure. We hope you will check it out, and give us more ideas to help new businesses be better prepared.
1) Don't all book-keeping apps have a projection function, so why do I need a separate app for cash flow projections? Book-keeping platforms like Xero or Quickbooks capture and maintain accounting data. They provide businesses most of the financial information they need - Income statements, balance sheets and the detailed supporting analysis. They do not, however provide any financial projections. What are available are apps that extract historic accounting data from book-keeping platforms and either: (1) Extrapolate trends from historic data, with adjustments to key assumptions like sales, gross margins, working capital requirements. (2) Take dates of invoices issued and received and produce very short-term cash projections of receivables (3) Help the user to build financial models on an Excel platform. ​ (1) Adjusting historic trends does not allow for business assumption to be quantified and explained to investors or bankers and are limited to the type and granular detail available in the accounting records. ​ (2) These are definetely not financial projections. But essentially reminders as to when invoices are due for payment or collection. Thats it. ​ (3) These are by far the most useful to date. They allow financial models to be built quickly and not require the input of any opening balance required. They still require the skills and experience of building financial models. As with all models, they need to be extensively tested. While the prompts formats significantly help the building of financial projections, none are designed to accommodate the ordering process and the L/C requirements of most businesses that operate in developing economies.
2) Everyone I know uses Excel to build financial projections. So, why get a separate app that is not as flexible? Excel continues to be the best platform to build projections. You can build exactly what you want and need. But it does take time and requires a certain level of skill to build a model that is flexible and easy to use. Building a financial model for a trading business is more complex than building financial models for large industrial or infrastructure projects, and usually only useful to, and dependant on, the model builder. Then there are the usual issues of having to check, every time it is used to ensure that it is the correct version, all the assumptions are correct, and its integrity has not been compromised by unauthorized adjustments. ​ Small to medium sized businesses do not always have the finance teams to build such models and most business owners do not have the skills or the time. They need to rely on financial advisors or accountants when financial projections are required by banks to get the facilitiees they think they need. ​ Trafic has been developed on Excel, based on extensive experience building models for multi-million industrial and infrastructure, for complex trading companies. We think we have taken account of all key business assumptions and uncertainties in a complex trading environment and test it extensively. Trafic then offers the flexibility you need without any of the restrictions and requirements of Excel. ​ And because, no one likes or trusts using model built by someone else.
3) Why restrict Trafic to trading companies? Trafic Lite and Trafic Pro are just the start. What developers call MVP - minimum viable product. We think Lite and Pro can also be used for other SME businesses with a little imagination and creativity. But we hope to follow them with Trafic for manufacturing companies, contractors, and most SME businesses that deal with real goods and logistics and tht need bank financing.