NACM Excel Presentation

Jon Paul

President, Value Added Finance Resources

847 372-1963

jon@valueaddedfinance.com

www.valueaddedfinance.com

www.excel-erate.biz

Case History

• Telecom Client

• Aggressive Launch

• Explosive Sales Growth- $50 Million Rate

• Realized Bad Debt Problem

• Running 15% of Sales

• Turned Out- Really Running 55% of Sales

Case History- End Result

• Within One Year Down to 5%

• Company Became Profitable

• Stock Climbed from Low of 1.50 to over 60

• Sold to Larger Competitor

• Employees Did Very Well In 401k Accounts

Case History- Action Items

• Cut Off Non Paying Accounts

• Set Up Prepaid Program For Poorest Credits

• Added Credit Scoring

• Tightened Credit Policies

• Stronger Collection Efforts

Case History- Role of Excel

• Identify Higher Amount of Bad Debts

• Capture and Monitor Collection History

• Identify Soft Spots in Collections

• Predict Future Collections

• Analyze Credit Scoring

• Communicate and Celebrate Success

Agenda

• Case History

• Uses of Excel in Credit Management

• Excel Tips

• Resources For Further Study

• Other Questions

Objectives

• See New Ways You Can Use Excel

• Pick Up Pointers on Excel

• Show Ways You Can Learn More

• Answer Questions During and Afterwards

Uses of Excel in Credit Management

• Rolodex

• Financial Analysis

• Database

• Reporting

Rolodex

• Account Lists

• Call Scheduling

• Call Tracking

Financial Analysis

• Bad Debt History

• Aging

• Credit Analysis

• Collection History

Bad Debt History

• Determine Bad Debt Rate

• Key- Matching Proper Periods

• Pull Back Bad Debts to Initial Revenue

Bad Debt History Example

Jan Feb Mar Apr May Jun Total

Before Matching

Sales 500 1,200 2,000 3,000 4,200 5,500 16,400

Bad Debts 20 60 245 378 615 825 2,143

Bad Debt % 4.0% 5.0% 12.3% 12.6% 14.6% 15.0% 13.1%

After Matching

Sales 500 1,200 2,000 3,000 4,200 5,500 16,400

Bad Debts 230 615 1,095 203 2,143

Bad Debt % 46.0% 51.3% 54.8% 6.8% 0.0% 0.0% 13.1%

Bad Debts Proj 230 615 1,095 1,650 2,310 3,025 8,925

Bad Debts Proj % 46.0% 51.3% 54.8% 55.0% 55.0% 55.0% 54.4%

Aging Flaws

• Looks Back

• Matches Different Time Periods

• Skewed When Sales Grow or Fall

• Not as Predictive

AR Aging- Growth Can Skew

AR Aging Current 0-30 31-60 61-90 Over 90 Total

Jan 395 190 121 73 69 847

Feb 960 316 161 109 138 1,684

Mar 1,640 797 269 145 241 3,092

AR Aging % Current 0-30 31-60 61-90 Over 90 Total

Jan 46.6% 22.4% 14.3% 8.6% 8.1% 100.0%

Feb 57.0% 18.8% 9.6% 6.5% 8.2% 100.0%

Mar 53.0% 25.8% 8.7% 4.7% 7.8% 100.0%

Alternative- Collection History

• Set Up 30 Day Buckets

• Track Collections During Each Bucket

• Analyze % Collected At Each Stage

Benefits- Collection History Approach

• Know What You Collect In Each Bucket

• Predict Future Bad Debts

• Identify Soft Spots In Efforts

• Red Flag Downtrends Early

• Set Targets For Improvement

Finding Soft Spots- Football Analogy

• 0-30 Days- First Down

• 31-60 Days- Second Down

• 61-90 Days- Third Down

• Over 90- Goal Line Stand

• What is Relatively Soft in Collections

• Almost Every Company Has a Soft Spot

Key to Success- Collection History

• Get Started

• Set Up 30 Day Buckets

• Consistent Cutoffs

• Break Down Into Groups

• Set Targets

• Measure Against Targets

Collection History ReportCollected Current 0-30 31-60 61-90 Over 90 Collected Bad Debts

Jan Sales 105 79 47 27 12 270 230

Feb Sales 240 163 104 55 22 585 615

Mar Sales 360 256 166 91 32 905 1,095

% Collect Current 0-30 31-60 61-90 Over 90 Collected Bad Debts

Jan Sales 21.0% 15.8% 9.5% 5.4% 2.4% 54.1% 46.0%

Feb Sales 20.0% 13.6% 8.6% 4.6% 1.9% 48.7% 51.3%

Mar Sales 18.0% 12.8% 8.3% 4.6% 1.6% 45.2% 54.8%

% Avail Current 0-30 31-60 61-90 Over 90 Collected Bad Debts

Jan Sales 21.0% 20.0% 15.0% 10.0% 5.0% 54.1% 46.0%

Feb Sales 20.0% 17.0% 13.0% 8.0% 3.5% 48.7% 51.3%

Mar Sales 18.0% 15.6% 12.0% 7.5% 2.8% 45.2% 54.8%

Collection History Chart

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Jan Sales Feb Sales Mar Sales

Current 0-30 31-60 61-90 Over 90

% Available Collected

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Current 0-30 31-60 61-90 Over 90

Jan Sales Feb Sales Mar Sales

Database Steps

• Determine Data Availability• Where to Keep Data• Clean Up Data• Perform Calculations• Group Data• Analyze Data• Summarize Results• Automate Process

Data Availability

• What Data Do You Want

• What Data is Available

• How Large is Dataset

• How Many Different Sources

• What Frequency of Data

Where to Keep Data

• Number of Records– Excel Now- 65,536 row limit– Excel 2007- 1,000,000 rows

• Alternatives– Excel– Database- Tie With Excel– Summary Information- External Tool- OLAP

Clean Up Data

• Converting Text to Numbers

• Splitting Data

• Correcting Data

• Filling In Missing Data

Adding Calculated Fields

• Dates- number of days

• Sums- total collected

• Ratios- % of bad debts

Adding Group Fields- Examples

• Date- week month year

• Territory

• Customer Group

• Product Line

• Credit Score

Analyze Data

• Pivot Tables

• Pivot Charts

• Lookups- multiple tables

Summarize Data

• Spreadsheet

• Pivot Table

• Charts

• Pivot Charts

• Dashboards

Excel Skills

• Broken Down Into Areas

• Time Won’t Allow Us to Cover All

• See Appendix for more complete list

• Resource- www.excel-erate.biz• Online Lessons

www.excel-erate.biz/excel/excel_index_alpha.htm

• Use to Test / Enhance Your Skills

• Same For Staff or Potential Hires

General

Saving Backup Copy of File

• File Menu

• Save As

• Click on Tools

• Select General Options

• Check – Always Save Backup

• Can Use Same Process to Password Protect

Backup Copy Dialog Box

Navigation

Go To Special

• Click F5 Key

• Click Special at Bottom of Dialog Box

• Select Where You Want to Go

• Wide Range of Choices

Go To Special Dialog Box

Cut and Paste

Two Not Well Known Shortcuts

• Ctrl + D = copy down– Copies row above down to next row

• Ctrl + R = copy right– Copies column at left to next column

Manipulation

Paste Special Values

Suppose You Had to Increase Forecast 5%

• Put in 1.05 in blank cell and copy

• Select cells with forecast to be increased

• Select paste special values

• Select values and multiply

Manipulation Example

Formatting

Paintbrush

• Handy Formatting Button in System Toolbar

• Use to Copy Format to Another Section

• Highlight Format You Like

• Click or Double-Click Paintbrush

• Move Paintbrush Over Sections to Reformat

Paintbrush Example

Printing

Multiple Page Setup• Use to Set Up Print Format of Multiple Sheets• Or Set Up Print Format of New Sheet

• Select Sheet With Print Format You Like• Select Remainder of Sheets (Shift or Ctrl Key)• Select File, then Page Setup• Click OK

Charts- Views

Same Sheet- Multiple Charts

• Create new blank chart sheet- click on a blank cell and click F11 to create new chart

• Create each chart – locate in this new blank chart sheet

• Go to the chart sheet - click Size with Window

• Adjust the size and scaling of the individual charts as needed

Multiple Charts- Same Sheet

Charts- Formatting

Secondary Axis• Add Data For Secondary Axis• Multiply If Needed to Show- Such as %• Chart- Click on Data- Format Data Series• Click on Axis- Change to Secondary• Change Chart Type to Line• Reformat Line• Shrink Number Back to Original Size if Needed

Secondary Axis Screen

Charts- Formulas

Chart Gaps- When Gap In Data

• Tools menu

• Select Options

• Click Chart Tab

• Make Selection– Not plotted- leave gap– Zero– Interpolate- fill in gap

Chart Gap Fix Options

Charts- Special TypesScatter

Formulas- General Techniques

Labels in Formulas

• Create Formulas Based on Row or Column Headings

• Setup- Go to Tools, Options, Calculation tab

• Select Accept Labels in Formulas

• Can Create Faster Formulas

• Intuitive for User to Follow

Labels in Formulas- Setup

Labels in Formula- Example

Sums

Sum – non-adjacent cells

• Fast way to create these

• Begin formula- =Sum(

• Click on first cell

• Hold down shift key

• Click on remainder of cells

Rounding

Round Function

• Use to round to certain number of decimals

• First part- calculation being performed

• Second part- number of decimals– Can do in reverse- such as -3 for thousands

Example =Round(sum(b3:b20),-3)

Averages

Weighted Average• Fast Way to Calculate• Start a sum formula• Multiply two parts• Finish the sum• Add the denominator• Finish- Ctrl + Shift + Enter key• {=SUM(B2:B6*C2:C6)/B7}

Weighted Average

If Statements- Conditional Formulas

Fundamental IF Statement

• Parts- Condition, Value if true, Value if false

• = if (D5=0,0,b5/c5)

• Can use text- = if (D5>.05,”Review”,””)

• Can use multiple conditions- And, Or– =if(And(D5>.05,C5>1000000),.06,.03)

• Can nest- to test for condition within condition

Error Trapping

ISERROR, ISNA

• Other ways to catch broader range of errors

• ISNA very useful for lookup errors when new values added that don’t match

• Example- =if(ISERROR(b5/c5),0,b5/c5)

Text

Concatenate

• Use to combine text into one cell• =Concatenate(text1 or cell1, text2 or cell2, etc.) 

• Can use both text and cell references

=CONCATENATE(A2," ",B2," ",C2)

Concatenate Example

Date

• Use to set up date fields in lists

• Year- =year(C2)

• Month- =month(C2)

• Day of month- =day(C2)

• Weekday- =weekday(C2,1)– Second variable is type– Can choose if week starts with Sunday or Monday

Named Ranges- Benefits

• More intuitive formulas

• Faster formula creation

• Easier to link between sheets and files

• Less likely to break links

• Use to navigate

• Faster consolidation

Named Ranges- Skills

• Manual Creation– Highlight row, column or range– Add in name in name box

• Pasting in Formulas– Start formula- such as + or =– Click F3 to pull up paste name box- select name

• Manually Adding in Formulas– Type in name in formula- such as +sales-cost_sales

• Navigation by Names– Click F5 – Go To dialog box- select name

Named Range Box

Named RangesFormula Example

Lookups- Benefits

• Automatically Pull in Information

• Avoid Manual Re-Entry

• Quality Control

• Faster Formula Creation

• Make Global Changes

Lookups

• Basic Lookup formula– Lookup value- value you are trying to find

• Such as January

– Lookup range- where you are trying to match• Such as sales data

– Column- what column has the value you want• Such as the sales for the lookup value

– Type of match- close or exact (false means exact)

=VLOOKUP(F2,sales,2,FALSE)

Lookup ExampleAdding Product Name

Data Lists- Setting Up

• Continuous Data- No Blank Columns or Rows

• Add Index Field If Desired

• Column Headers- Unique

• Column Headers- One Row

• Fill In Blank Cells as Needed

• Add In Calculated Fields

• Set Up Named Range

Data Lists- Viewing

Basic Auto Filter

• Data menu, filter, then auto filter

• Drop down arrows will be put at top of list

• Can use to select parts of list

• Can select on values in list, top 10 or custom

• Can filter on multiple fields

• Select all to return back to viewing entire list

Data Filter Example

Pivot Tables- Benefits

• Query data without a database

• Summarize results from large datasets

• Quickly build reports

• Change reports by pivoting fields

• Change views using drop-down lists

• Drill down to details

Pivot Table Fundamentals

• Pivot Table Setup– Data menu, then Pivot Table– Select type of data, then data range– Layout screen

• Drag in rows and column fields for report

• Drag in data fields

• Drag in page fields if desired

– Finalize- select location for table

Pivot Table Fundamentals II

• Pivoting Fields– Drag to row, column or page headers

• Narrowing selections– Using drop-down boxes

• Group selections– Primarily dates

• Drill Down to Detail– Double click on data cell in pivot table

Pivot Table Result

Pivot Charts

• Creating Charts– Create automatically from pivot table

• Pivoting– Drag like you do with the pivot table– Note that chart change will affect table

• Drop Down Lists– Similar to pivot table

Pivot Chart Example

Simulations

Data Tables- 2 Variables

• One calculation based on two variables• One variable across, one variable down• Sample calculation in upper left of table• Sample values above the table• Close with Ctrl + Shift + Enter

{=TABLE(B5,B4)}

Data Table- 2 Variable

Macros- VBA- Benefits

• Automate Repetitive Tasks

• Data Cleanup

• Perform More Complex Calculations

• Streamline Navigation, Printing

• Faster Calculations, Setup

Macros- VBA- Basics

• Syntax- Name Object, then Action– If someone threw ball to you- Ball, Throw

• Creating- Macro Recorder– Simplest way to start– Example- record print settings

• Linking Macros- Menu or Buttons

Other Resources

• Excel-erate- www.excel-erate.biz

• John Walkenbach books

• Bill Jelen- Mr Excel- www.MrExcel.com

• Excel User newsletter- www.ExcelUser.com/Biz/

• Inside Microsoft.com- www.elijournals.com

Questions- Contact Us

Jon Paul, PresidentValue Added Finance Resources

847 372-1963jon@valueaddedfinance.comwww.valueaddedfinance.com

www.excel-erate.biz