SPEED SHEETSTM

Welcome to the “American Financial Group SPEED SHEET™ Demo” — this is where all the magic happens.  In this scenario, Financial Matrix, Inc, a business services vendor specializing in Risk & Compliance Management, implemented a SPEED SHEET™ to improve Sales & LDR Prospecting & Marketing ABM programs to break into a new account in their financial services vertical.

Account Actionable Financial Insights

Vendor's solution aligned to Target Account objectives & initiatives
Corporate Goals
Benchmarks
Strategic Initiative Alignment
Vendor Sales Insights & Messaging
Revenue Growth
Growth Rate
Strategic Initiative
- Core Principles

Vendor Contribution
- Write-off Improvement
Helping Sales understand the initiative
    - Account wants to remain focused on their core business fundamentals
    - Customer retention and acquisition rates are stagnant, affecting revenues
    - Account needs to improve customer retention and acquisition

How your product helps the initiative
    - The Workflow solution will proved a more intuitive customer interaction
    - Improved customer satisfaction will drive retention and reduce write-offs
EBITDA
Current Margin
Strategic Initiative
- Core Principles

Vendor Contribution
- Lowering SG&A Costs
Helping Sales understand the initiative
    - Maintaining and increasing EBITDA is very important to the Account
    - Account has experienced high variability in their SG&A categories
    - Account can reduce variability by decreasing auditing expenses

How your product helps the initiative
    - Certification and Reconciliation will reduce labor charges and audit qualifications
    - Improved auditing will lower total SG&A expenses
Free Cash Flow
Fiscal Year
Strategic Initiative
- Expand Footprint

Vendor Contribution
- Increase Revenue
Helping Sales understand the initiative
    - Account has an aggresive acquisistion strategy for the year
    - Account will incur costs related to these acquisitions
    - Account needs to limit costs of acquisition to protect cash flow

How your product helps the initiative
    - NXG and Dashboard will drive down acquisition processes and functions
    - This will increase Free Cash Flow
Interest Coverage Ratio
Current Ratio
Strategic Initiative
- Financial Offerings

Vendor Contribution
- Improve EBITDA
Helping Sales understand the initiative
    - The Account has very low debt and a very high Current Ratio
    - The Account is well positioned for mergers and acquisistions
    - Account needs improved business processes to manage acquired business

How your product helps the initiative
    - Dashboard and Workflow will streamline post-merger business processes
    - This will enable Account to maintain a high interest ratio
Working Capital
Current Liabilities
Strategic Initiative
- Core Principles

Vendor Contribution
- Lowering Current Liabilities
Helping Sales understand the initiative
    - Account has an excellent Working Capital ratio
    - Account's liabilities are increasing faster than their assets
    - Account needs to reduce expenses relating to liabilities

How your product helps the initiative
    - Certification and Reconciliation will lower internal manual processes
    - Lower costs will improve Account's Working Capital level

1. EBITDA – Earnings before interest, taxes, depreciation, and amortization; basically Operating Income (Rev – (COGS + Operating Expenses)).2. Often called owner earnings – used to determine whether a company has the cash to invest in the business, pay dividends, or buy back stock.

2. This is an indicator of whether the account can take on more debt. Too close to 1 indicates they cannot make their interest payments. A higher number means they can afford to take on more debt. In other words, it measures the margin of safety a company has for paying interest during a given period, which a company needs in order to survive future (and perhaps unforeseeable) financial hardship should it arise.

3. Working capital is Current Assets minus Current Liabilities. Working Capital is the money a company needs to finance the daily operations. If this figure is too low, they don’t have the means to run the business and must borrow funds. Anything below 1 indicates negative W/C (working capital). While anything over 2 means that the company is not investing excess assets. Most believe that a ratio between 1.2 and 2.0 is sufficient.

These corporate initiatives come from the most up to date annual report and financial analysis (10K-10Q) of the Target Account (American Financial Group). Aligned and sorted in “order of importance” to the Vendor’s (Financial Vendor) solution, this page helps support messaging for access and Engagement with Decision Makers and C-suite.

Core Principles
Maintain focus on specialty niches, product line diversification, underwriting discipline, and business fundamentals. This has been the mantra of the company since inception, to facilitate growth of the core businesses at the forefront of the company and the marketplace.

Expand Footprint
Expand operations beyond U.S. borders in order to increase market share. Peers within the industry benefit from global footprints, driving revenue and profitability. Due to a crowded local market that is dominated by larger P&C providers, global acquisitions will provide the best opportunity to drive revenues.

Financial Offerings
Provide uncomplicated, consumer-centric annuities to build market presence. Easy to understand offerings drive customer understanding and satifsfaction, which in turn will increase market presence. Additionally, regulatory challenges and accounting responsibilities require financial products that can stand the test of time by regulators and consumers alike.

Acquisitions
Take advantage of industry and economic disruptions to allocate capital to businesses with the greatest return potential. Businesses that may not directly correlate to the P&C insurance cycle, or with each other, are still potential targets if the returns are greater than the investment.

Jeff Consolino, Executive Vice President & Chief Financial Officer  Joseph E. (Jeff) Consolino has been the Executive Vice President, Chief Financial Officer at AFG since 2013 and has been its Director since 2012. From 2006 to 2013, Mr. Consolino was the President and Chief Financial Officer of Validus Holdings, Ltd., a reinsurer based in Bermuda. Prior to joining Validus, he served as a Managing Director in the investment banking division of Merrill Lynch, specializing ininsurance company advisory and financing transactions. Mr. Consolino also serves on the Board of Directors of Validus, as the Chairman of the Board of National Interstate Corporation and as a Director at AmWINS Group, Inc., a wholesale insurance broker based in North Carolina.

Michelle Gillis, Vice President – Internal Audits  Michelle A. Gillis has been the Vice President, Internal Audits AFG since 2013. Since 2012, Ms. Gillis served as the Vice President and Chief Administrative Officer of the Company with responsibilities for human resources, corporate communications, real estate and various shared service areas. Prior to this role, she served as the Vice President overseeing human resources. Since joining Great American Insurance Company in 2004, Mr. Gillis held various senior human resource management positions. Previously, she spent several years in senior human resources roles in the financial services sector.

Christopher Miliano, Executive Vice President – Annuity Operations  Mr. Miliano has served as the President and Chief Executive Officer of the JFP Group, a real estate investment and development company, from 2005. Mr. Jacobs has served as the Chairman and Chief Executive Officer of Jamos Capital, LLC, a private equity firm specializing in alternative investment strategies from 2008. Since its founding in 1996 until 2005, Mr. Jacobs served as the Chairman and Chief Executive Officer of Regent Communications. He currently serves as a Director at Global Entertainment Corp and serves on the Board and Executive Committee of the National Football Foundation and College Hall of Fame, Inc.

Value Alignment Matrix

Connect the financial value of your Products & Services. Align them to Target Accounts' goals, initiatives & gaps.
Stakeholders
Business
Reason To Buy
Desired
Business Outcomes
Industry Benchmarks (Validate Desired Outcomes)
Annual C-Suite Value (Likely)
Vendor Solution
Aligned = A, B, C
CIO
CTO
Replace homegrown legacy systems
Improve system maintenance
Reduction of IT Costs
IT costs are 14% of Expenditures
15% Reduction in IT (COST)
$11.5M C-Suite Value
NXG

Score = A
SVP Ops
CFO
Accounting
Maximize daily cash position
Increase rate of return on cash
Interest Coverage Ratio
Interest Rate of Return - 14%
10% Increase in Investments (Revenue)
$9.34M C-Suite Value
Dashboard

Score = C
SVP Ops
CFO
Accounting
Reduce time and risk with reconciliation
Eliminate manual error processes
Reduction of SG&A Costs
SG&A costs are - 32% of Expenditures
20% Reduction in Risk Exposure (COST)
$4.12M C-Suite Value
Reconciliation

Score = A
CFO
Improve stagnant premiums
Reduce write-off and reserves for losses / fraud
Recapture Lost Revenue
Write-offs - 1.6% of Premium Revenues
15% Increase in Recapturing (REVENUE)
$3.25M C-Suite Value
Workflow

Score = B
CIO
CFO
EVP
CCO
Lower labor costs on auditing
Reduce qualifcations on audit report
Reduction of SG&A Costs
SG&A costs are 32% of Expenditures
20% Reduction in SG&A auditing (COST)
$1.9M C-Suite Value
Certification & Reconciliation

Score = B
CIO
CFO
EVP
Reduce management report interpretation time
Improve management decision-making process
Reduction of SG&A Costs
SG&A costs are - 32% of Expenditures
15% Reduction in Management Labor (COST)
$1.15M C-Suite Value
Dashboard

Score = A

1. Forecasting, specifically via Monte Carlo simulations, is integral to understanding the role that risk plays in Vendor value models. This technique allows for accurate value predictions through the use of historical data, subject matter expertise, experience, industry benchmarks, and the ability to draw inferences from thousands, or millions, of simulations. Using industry-standard forecasting software, Revenue Accelerators creates unique Target Account forecasting models focusing on those areas where VENDOR can provide the most value.

2. Value metrics are determined using conservative, likely, and optimistic scenarios.

Account Value Hypothesis

Financial Vendor (Vendor) is providing American Financial Group several individual business outcome opportunities to improve revenues and decrease costs, with a total potential of $52.9M based upon Financial Matrix, Inc.'s strategic application for Revenue Management, Auditing, and Business Solutions.
Vendor Alignment to Account Initiatives
Year 1
Year 2
Year 3
Total
Initiative: Strategic Core Principles
ALIGNED VALUE DRIVER
SUPPORTED KPI
VENDOR: SOLUTION
Reduction in IT Costs
EBITDA
NGX Platform
$5,250,000
$8,540,000
$11,528,000
$25,318,000
Recapturing Lost Revenue
Revenue Growth
Workflow Module
$750,000
$1,125,000
$3,250,000
$6,125,000
Initiative: Expand Business Footprint
ALIGNED VALUE DRIVER
SUPPORTED KPI
Reduction in Auditing Expense
Free Cash Flow
Certify & Reconcile
$900,000
$1,450,000
$1,900,000
$4,250,000
Initiative: Financial Offerings
ALIGNED VALUE DRIVER
SUPPORTED KPI
Increase Investment Revenue
Interest Coverage Ratio
Dashboard Module
$2,635,000
$5,885,000
$9,340,000
$17,860,000
Margin from Revenue Growth
Revenue Growth
Dashboard Module
$65,000
$80,000
$110,000
$255,000
Initiative: Acquisitions
ALIGNED VALUE DRIVER
SUPPORTED KPI
Reduction in Management Labor
EBITDA
Dashboard Module
$325,000
$780,000
$1,115,000
$2,220,000
Improvemement in Risk Avoidance
Working Capital
Reconciliation
$1,680,000
$2,995,000
$4,115,000
$8,790,000
Sub Total, Value Potential
$11,605,000
$21,855,000
$31,358,000
$64,818,000
Value Factor Adjustment
45%
75%
100%
Total Value Potential
$5,222,250
$16,391,250
$31,358,000
$52,971,500
Realized Value Benefit
Initial Investment
$400,000
Yearly Investment
$560,000
$140,000
$120,000
$820,000
Payback, in months
4.8
3.2
3.1
Net Present Value (NPV)
$52,151,500
SG&A Impact
$40,833,000
Return on Investment (ROI)
5,324%
Margin % Impact
12%
Decision Delay Cost (3 mo)
$4,219,000
Hurdle Rate
5%
* This changes based on Revenue reductions, COGS, or SG&A
  1. The Payback Period is the the amount of time it will take to recover the cash invested in a project and is calculated using the resulting cash flows. When the cash investment is significantly smaller than the projected cash flows, a conservative approach will be to add a fiscal quarter to the result.
  2. Using the company’s cost of capital, NPV is sum of discounted cash flows minus original investment. In capital budgeting hurdle rate is minimum rate a company expects to earn when investing; or required return or target rate.
  3. ROI is usually expressed as a % used to compare a company’s profitability or to compare the efficiency of different investments. The return on investment formula is: ROI = (Net Profit / Cost of Investment) x 100.
  4. Cost of Delay is the impact of time on business outcomes; it combines an understanding of value with how that value leaks away over time. Faster decisions mean Value is delivered sooner.
  5. SG&A refers to Selling, General and Administrative Expenses; a “major” non-production cost presented in an income statement. A key measurement for any corporation. A 1% reduction is strategic to a Decision Maker.
  6. Margins help businesses assess how much of their revenue they keep; Margin analysis helps identify what efforts are improving the amount of profit is being brought in by Investments.
Value Control Center
Save & send versions of the value hypothesis.
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How to use: Sales Messaging • ABM • Get the Meeting • Close the Deal • Sales Rep Training
Messaging Control Center
This center integrates all "value cells" from each SPEED SHEET section to automatically help Sales create Persona & Named or Target Account-specific messages for custom Value Propositions, Emails, Voicemails, and Social Media Messaging.
Select Business Initiative: 
Select Target Leadership: 
Select Message Type: 
 
             

Health cash flow provides opportunities to invest in the company. Buy stock, pay off debt, etc.

Calculation: Cash from Operating activities – Capital expenses

In most industries, a current ratio is too low when it is getting close to 1. This means they can barely cover the liabilities that will come due with the cash they have coming in. Most bankers won’t loan money to a company with a current ratio near 1. Less than 1, is way too low, regardless of how much cash they have in the bank. If less than 1 they will likely run out of cash by the end of the year. A current ratio too high means they are sitting on cash rather than investing it or returning it to the shareholders.

Calculation: Current assets / Current Liabilities

When this number is too close to 1 it indicates, they can’t make their interest payments. The higher the number the more debt they are able to take on.

Calculation: Operating profit/Annual interest paid

DSO is the average number of days that a company takes to collect revenue after a sale has been made. A low DSO means that it takes fewer days to collect your accounts receivable. A high DSO means that a company is selling its product on credit and taking longer to collect payments.

Calculation: Accounts receivable ÷ Total Credit Sales * Number of Days

Used to assess a company’s profitability by comparing revenue with earnings. EBITDA is defined as earnings before interest, taxes, depreciation, and amortization.  

Calculation: EBITDA ÷ Revenue

This ratio is used as a relative measure of debt. In other words, what you owe in relation to what you own.  The two components in the calculation–i.e., total liabilities and total equity–come from the Balance Sheet.

Calculation: Total Liabilities ÷ Total Equity

Once again, this metric is one of the most affected when calculating value delivered. If your value increases revenue or reduces labor cost, it will positively affect it.

Calculation: Total Sales ÷ Total Payroll Expense

This simple calculation is important because our research indicates that the majority of value delivered by organizations is a reduction in labor cost. The average U.S. Corporation keeps this figure around 20 percent – 23 percent depending upon the market they serve.

Calculation: Total Payroll Expense ÷ Total Revenue

Net profit margin is the bottom line – the amount you have left after every other expense is taken out. Gross profit margin is your revenue minus what it costs to make your product.

Calculations: Net Profit margin = Net pretax profit ÷ Revenue, and Gross profit = Gross profit ÷ Revenue

Operating costs are the day to day expenses incurred in running a business. For example, cost of sale or administrative costs are considered operating costs.  Production costs are not considered operating costs.

Earnings is revenues minus cost of sales, operating expenses, and taxes over a given period of time.

Calculation: Earnings = Revenue – (Operating expense + taxes)

Sometimes called, “Return on net worth”, ROE measures a corporation’s profitability by revealing how much profit it generates with the money shareholders have invested. Displayed as a percentage, ROE is useful for comparing the profitability of a company to that of other firms in the same industry.

Calculation: ROE = Net Income ÷ Shareholders Equity

ROA is an indicator of how profitable a company is relative to its total assets. The assets of a company are comprised of both debt and equity. The ROA percentage gives investors an idea of how effectively the company is converting the money it has to invest into net income. It is most effective to compare current ROA to previous year ROA. The higher the ROA percentage, the better, because the company is earning more money on less investment. For example, if one company has a net income of $10 million and total assets of $50 million, its ROA is 20 percent ($50M / $10M); however, if another company earns the same amount but has total assets of $100 million, it has an ROA of 10 percent. Based on this example, the first company is better at converting its investment into profit.

Calculation: ROA = Net Income ÷ Total Assets

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