Micro-PinoyA Financial Projections Tool for Microfinance Operations

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Micro-Pinoy

• Micro-Pinoy is a business planning software that generates projected financial statements.

• Particularly useful to those who are planning for a microfinance start-up operation/product and need to make financial forecasts.

• Automatically generates monthly statements of income and expense, statements of condition, statements of cash receipts and disbursements, and performance ratios.

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Advantages of Micro-Pinoy

• Makes the preparation of financial projection easier and faster

• Easy to use, although, a basic knowledge of Microsoft Excel is essential.

• It was made with the user in mind and can be learned in a day.

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Important Notes

1. Micro-Pinoy Template runs on Microsoft Excel. It contains Macro commands that make it work properly. Therefore, the macro feature of Excel should be enabled.

When opening a Micro-Pinoy file, choose “Enable Macros” if Excel prompts you to choose between disable or enable macros. If Excel asks if you wish to run macros, choose “Yes”.

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 2.Micro-Pinoy is divided into worksheets for easy

navigating. You can move between worksheets by mouse-clicking on the following worksheet tabs:

•   Loans• Manpower• Savings• Fixed Assets• Cashflows• Income Statements• Balance Sheets• Ratios

Important Notes

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3. The projection period is 24 months or less.

4. Input cells are colored aqua and the figures are in blue. You could change these figures to suit your situation and plan. The rest of the cells are “protected cells” that is, they cannot be changed.

Important Notes

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The Loans Worksheet

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Loan Worksheet

Click on the worksheet tab labeled “LOANS”. Go to the top of this worksheet.

Step 1 Replace the phrase in blue cell A1 labeled “NAME OF INSTITUTION” with the name of your bank. Also, replace the “Sub-name” in cell A2 with the name of the branch, operating unit (e.g. microfinance operations), or product.

Type “Bangko Pinoy” in cell A1, and “Intramuros Branch” in cell A2.

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A. Loan Release

Step 2 Micro-Pinoy default shows Month 1 to be January (cell G4) and Year 2000 (cell G5). You may replace the month by choosing the options provided in the dropdown list. The year may be replaced by typing on cell G5. Then, click the button labeled “CLICK THIS BUTTON AFTER PROVIDING THE MONTH AND YEAR” in order to automatically fill in the rest of the months

Select “July” in cell G4, and type “2003” in cell G5.

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 Step 3

Input the average loan sizes in cells C53 to C64. Match these with the Average Terms (days) provided in cells E53 to E64. The figures in cell C53 to C64 should represent the average loan sizes in their proper order of timing, starting with the first loan to the next as you vertically go down Row C.

Input the following loan sizes in Cells C54 to C58:Cell C54: 7,000

C55: 12,000C56: 18,000C57: 25,000C58: 30,000

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Warning!

• Never use the space key in the computer keyboard when emptying a cell. Doing so inserts a space character that is different from an empty cell or a zero. If you use the space key to empty a cell, Micro-Pinoy will show a #VALUE! in the affected cells resulting in erroneous calculations. To empty a cell, always use the Delete key.

• Avoid using the Move or Cut and Paste functions because this can overwrite some cell formats in Micro-Pinoy.

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Step 4 Input the number of loan releases for new clients for each month in cells F53 to AC64. Do not include repeat loans because they are automatically computed by Micro-Pinoy. That is, clients that finish their 1st loans are assumed to go into the 2nd loan, and so forth.

Assume that there will be 30 new loans of P7,000 each per month. Input the number 30 in cells F54 to AC54.

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B. Client Retention Rate

Step 5 Provide an estimate of the client retention rate (on the average). For example, a retention rate of 80% means that 20% of those who received a loan will not proceed to the next loan or cycle. Input these percentages according to your estimates in cells F72 to AC72. Then, Micro-Pinoy automatically computes for the number of active clients and number of loans disbursed for each month. The default values in Micro-Pinoy are 100%.

Assume that the average client drop-out rate is 10%. Input 90% in Cell F72.

(Check: The total number of active borrowers in Month 24 should be 539)

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C. Loan-Loss Reserve

Step 6 Provide the average loan loss provision rate as a percentage of loans receivable increment in cells F160 to AC160. In case you plan to use the same rate all throughout the months, you do not have to repeat inputting the figure because Micro-Pinoy will use the last figure you had provided.

Assume that the average loan-loss provision rate is 2%. Input 2% in cell F160.

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D. Collection Rate

Step 7 Not all collections due (principal, interest, penalty) might be collected on due time. You may input the collection rate that reflects your expectations in cells F170 to AC170. For example, a 90% means that you will be able to collect 90% of expected collections during the month. In almost all instances, this cell should not be zero. Otherwise no collection amount will be computed.Assume that the average loan collection rate is 98%. Input 98% in cell F170.

Check: Loan Portfolio balance in Month 24 should be P6,224,575.

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E. Interest on Loans

Step 8 Input the annual (not monthly) nominal interest rate in cells F183 to AC183. Again there is no need to repeat the inputting of the same figures.

Assume that the interest rate is 3% per month. Input 3% in cell F183.(Refer to next slide: Recommended to use 1.68 % instead in cell F 183)Step 9

Interest can either be amortized (paid in future amortizations) or deducted (from the loan proceeds to the borrower). Choose whether it is amortized or deducted by clicking on the corresponding button.

Assume that the interest income is amortized.

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E. Interest on LoansCaution: Program Calculation of Interest is based on flat rate.

BSP issued Circular 730 to take effect starting July 1, 2012 which promotes and mandates pricing of interest to be transparent.

See link on Pricing Transparency seminar - Assuming interest rate remain unchanged, the interest income in absolute value will decrease by 44 %.

E.g. Interest Rate = 3 % Nominal interest rate X 56% = 1.68 %

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F. Service Fee

Step 10 There are two (2) options. One is based on a percentage of loan amount that is deducted from the loan proceeds (cells F197 to AC197). The other option is based on a fixed amount per loan disbursed that is also deducted from the loan proceeds (cells F203 to AC203). Choose one of the options and specify the figure. There is no need to repeat the inputting of the same numbers if they remain unchanged from the one you had previously specified.

Assume that the service fee is 5% of the loan amount. Input 5% in cell F197.

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F. Service Fee

Caution: BSP issued Circular 730 to take effect starting July 1, 2012 which promotes and mandates pricing of interest to be transparent.

The circular specifically mentioned service fee shall be included in calculating effective interest rate (EIR). With the circular, and in compliance with the Philippine Financial Reporting Package

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G. Penalty Fee on Missed Payments

This is an optional item in Micro-Pinoy. It is useful if you expect that some loan amortizations/payments will be missed.

Step 11An average penalty rate per day can be provided as a percentage of the late principal payment (cells F216 to AC216).Assume that the average penalty is 1% per day. Input 1% in cell F216.

Step 12Cells F218 to AC218 are also available for the average number of days the payment is delayed. For example, a 3 means that those missed payments would be delayed for 3 days, on the average. You may use any integer not more than 30.Assume that the average number of days payment is delayed is 2 days. Input 2 in cell F218.

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H. Credit Insurance

Step 13

This refers to the insurance fee charged to borrowers.  There are two (2) options. One is based on an average percentage of loan amount that is deducted from the loan proceeds (cells F228 to AC228). The other option is based on an average amount per loan disbursed that is also deducted from the loan proceeds (cell F233 to AC 233). Choose one of the options and specify the figure.

Assume that the credit insurance fee is 1% of the loan amount.  

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Part of this amount is retained as insurance or commission income, while the rest is booked as accounts payable (insurance). Input this insurance income or commission rate in cells F238 to AC238. Again, there is no need to repeat the inputting of the same numbers.

Assume that the bank commission is 20% of the insurance fee.

H. Credit Insurance

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I. Other Fees on Loans

Step 14

This may include other fees such as processing fee, etc. There are two (2) options. One is based on an average percentage of loan amount that is deducted from the loan proceeds (cell F247 to AC247). The other option is based on an average amount per loan disbursed that is also deducted from the loan proceeds (cell F252 to AC252). Choose one of the options and specify the figure.

Assume that a loan processing fee of P20 is collected per loan disbursed.  

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J. Variable ExpensesStep 15

Micro-Pinoy classifies expenses into variable and fixed. Variable expenses are those that increase or decrease depending on an independent variable. An example is the relationship between transportation expense and the number of field staff (Account Officers and Microfinance Supervisors). Normally, the number of field staff affects the amount of transportation expense – i.e. as the number of field staff increase, so does transportation expense. Another example is the relationship between office supplies expense and the number of loans disbursed. Again, these two generally increase proportionately.  Estimate the average amount of money that one (1) microfinance field staff/account officer/collector spends for transportation on a regular working day. Provide your input in cell F265.

Assume that the average transportation expense per AO is P400 per month. Input P400 in cell F265.

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I. Other Fees on Loans

Step 16 Micro-Pinoy allows you to include other types of expenses that are linked to the total number of field staff. If there is any, list them in cells B266 and B267, then type the corresponding amounts per field staff in cells F266 to AC266 and F267 to AC267 respectively. Do not include salaries and compensation here because these will be taken up in the “MANPOWER” worksheet.  Assume that there are no other expenses related to the number of field staff.

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Step 17

Variable expenses that are related to the number of loans disbursed during the month. Estimate the average stationery and supplies expense per loan disbursed in cells F278 to AC278.  Assume that average expenses on office stationery & supplies is P12 per loan. Input P12 in cell F278.

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You may specify other expenses that are related to the number of loans disbursed. List them in cells B279 and B280, then provide the estimated average amounts in cells F279 to AC279 and F280 to AC280 respectively.Assume that there are no other expenses directly related to the number of loans disbursed.

I. Other Fees on Loans

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K. Fixed Expenses

These expenses represent those that are easily estimated in absolute amounts such as communications expense, rent expense, etc.

Step 19Provide the estimated average monthly communications expense (telephone, fax, e-mail, radio, postage, etc.) in cells F294 to AC294.

Assume that the average communication expense is P150 per month.

Step 20If any, input the rent expense in cells F295 to AC295.  Assume that there is no expense for office rent.

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Step 21

You may include other fixed expenses. List them in cells B296 and B297, then provide the estimated average expense for those in cells F296 to AC296 and F297 to AC297 respectively.

Assume that the average expenses for office supplies is P300 per month, and miscellaneous expenses are P500 per month.

K. Fixed Expenses

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L. Gross Receipts Tax

Step 22

The Gross Receipts Tax is computed as a percentage of gross monthly income, and paid at the end of each quarter. Input an average rate in cell F309 to AC309.

GRT is 5% of gross monthly income. Input 5% in cell F309.

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Important!

 Save File: It is prudent to save your work regularly in order to minimize the possibility of losing data. Save this file using BANGKO PINOY as file name. To Print: If you wish to automatically print the figures from months 1 to 24, click the button labeled “CLICK HERE TO PRINT THE MONTHLY FIGURES” adjacent to the top rows of the worksheet.

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Manpower

Click on the worksheet tab labeled “MANPOWER”.

“Account Officer” refers to staff that solicit new clients, process loans and collect loan payments. They are also known as Field Staff, Collector, Account Solicitor, Credit Investigator, Field Appraiser, and others.

“Microfinance Supervisor” is also a generic term referring to those staff whose primary responsibility is to directly supervise the Account Officers.

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A. Workload Indicator Per AO

Step 7 Not all collections due (principal, interest, penalty) might be collected on due time. You may input the collection rate that reflects your expectations in cells F170 to AC170. For example, a 90% means that you will be able to collect 90% of expected collections during the month. In almost all instances, this cell should not be zero. Otherwise no collection amount will be computed.

Assume that the average loan collection rate is 98%. Input 98% in cell F170.

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QUESTIONS?