Use mini drivers in the Balance Sheet budget

Owned by Denise McGettigan
Last updated: Feb 14, 2024
6 min read

Mini drivers are an easy way to represent the links between your statements when you use 3-statement budgeting. Use mini drivers to forecast or budget your Balance Sheet items, so your Cash Flow better reflects reality. These drivers behave similarly to additional measures you can include in the budget setup.

In addition to a custom option that allows you to create your own mini driver from scratch, three out-of-the-box templates cover common scenarios for debtors (accounts receivable), creditors (accounts payable), and stock. These templates have pre-built lines with basic inputs for a calculation, allowing you to quickly model common interactions between your Profit and Loss (P&L) and Balance Sheet items without having to manually enter formulas. 

Watch this video for an introduction to mini drivers.

  1. Either create a Balance sheet budget or, if you have one already, right-click the Balance Sheet tab and click Mini driver setup.

  2. On the Mini Drivers screen, click + Add mini driver in the bottom-right corner and select the required template (expand the sections below for details).

Debtor Days is the most commonly used mini driver. It allows you to predict how your debtors are going to behave based on the level of sales you have in a given period.

The Debtor Days template has the following elements:

Calculation: (P&L Movement/Days()) * Accounts Receivable Days, where:

  • Days = Accounts Receivable Days. The number of days it takes to receive payment from your customers.

  • Reference = The P&L Movement; the accounts in your P&L that drive your accounts receivable. In other words, the accounts from which you are going to get the sales that determine your debtor balance.

For example, suppose you typically collect debtors every 22 days and this is based on the values in your Sales (Retail) and Sales (Online) accounts. You can customize the Debtor Days template to meet your needs, as illustrated in the following image.

In the Balance Sheet, when you expand the Accounts Receivable account row, you can see the mini driver lines. When you look at the values, you can see the movement in your debtor balance, which reflects when there are higher and lower sales.

Watch this video for a demonstration of adding the Debtor Days mini driver:

The Creditor Days mini driver works similarly to the Debtor Days except that it applies to costs.

The Creditor template has the following elements:

Calculation: (P&L Movement/Days()) * Accounts Payable Days, where:

  • Days = Accounts Payable Days. The number of days it takes to pay your suppliers.

  • Reference = The P&L Movement; the accounts in your P&L that drive your accounts payable. In the case of creditor days, you need to identify the accounts from which you are going to determine your creditor balance.

For example, suppose you typically pay your creditors every 40 days and this is based on the values in your Purchases and Expenses accounts that are paid on credit terms. You can customize the Creditor Days template to meet your needs, as illustrated in the following image.

In the Balance Sheet, when you expand the Accounts Payable account row, you can see the mini driver lines. When you look at the values, you can see the movement in your creditor balance, which reflects when there are higher and lower purchases and expenses.

Watch this video for a demonstration of adding the Creditor Days mini driver:

The Stock Turnover mini driver has a slightly different calculation to that of the Debtor Days and Creditor Days.

The Stock template has the following elements:

Calculation: (P&L Movement * Stock Days) / Days(), where:

  • Days = Stock Days. The number of days it takes to sell stock.

  • Reference = The P&L Movement; the accounts in your P&L that drive your accounts payable.. In the case of stock days, you need to identify the accounts from which you are going to determine your stock balance, which is typically your Cost of Sales.

For example, suppose you typically turn over stock every 32 days and this is based on the values in your Cost of Sales accounts. You also need to make adjustments for seasonality impacts throughout the year. You can customize the Stock Days template to meet your needs, as illustrated in the following image.

In the Balance Sheet, when you expand the Inventory account row, you can see the mini driver lines. When you look at the values, you can see the movement in your stock balance, which reflects when there are higher and lower cost of sales. The adjustment line is empty, ready for when you need to manually enter values.

Watch this video for a demonstration of adding the Stock mini driver:

 

The custom option is simply a blank calculation from which you can build your own mini driver.

The following video shows how to add a mini driver with several lines to calculate your long term loan balance.

 

  1. Add a name for the driver. This name is for reference purposes here in the setup window, it does not get carried through to the Balance Sheet.

  2. Select the account you want to drive. This is the account under which the driver lines display in the Balance Sheet. You can only select one account per mini driver and you cannot select a Bank or Retained Earnings account.

  3. Click the Expand button to view the elements of the driver, which include a Calculation, and a Days and Reference line.

  4. Edit the default Days line setup as required; you can change the name and the number of days. These details display in the driver line in the Balance Sheet.

  5. Edit the default References line setup as required:

    1. Click Add/Edit References, then locate and select the Profit and Loss account(s) you want to reference. The Referenced count increases accordingly to let you know at a glance how many accounts are being referenced. It is the sum of these accounts that displays in the values in the driver line in the Balance Sheet.

    2. Edit the name to better reflect the accounts you are referencing. This is the name that displays in the driver line in the Balance Sheet.

  6. Add more lines (driver elements) as required, if the standard template does not meet your needs. For example, you might want to add an adjustment line to deal with seasonality. Remember to update the calculation to include the adjustment line. Watch the video in the custom mini driver section above to learn more about each type of line.

  7. Add additional mini drivers as required.

  8. Click Create Balance Sheet or Update Balance Sheet as applicable.

  9. Proceed to explore the mini driver lines under the applicable accounts in the Balance Sheet budget.