1. Annual Revenue associated with Invoices for the best customer (not more than 3 to 6 great customers) of the business that represents a minimum of 5% to 7% of the Clients entire revenue (also record the annual revenue of the business). Determine the normalization factor (the actual percentage of revenue of the Cost of Goods Sold the customers represent). Get the information from the Income Statement and the Accounts Receivable Aging Report.
2. Ascertain the Annual Fixed Costs associated with the business. Determine the actual percentage of the Annual Revenue the Fixed Costs represent, so that, you can compute the normalized amount using the normalization factor determined above. Get the information from the Income Statement and the Balance Sheet.
3. Ascertain the Annual Variable Costs associated with the business. The Hard and Soft Costs are combined together as Variable Costs. Get the information from the Income Statement and the Inventory Statement.
4. Determine the Average Invoice Size for these customer(s) of the business. Get the information from the Accounts Receivable Aging Report.
5. Determine the Post Invoice Accounts Receivable period for the customer(s) of the business. Get the information from the Accounts Receivable Aging Report.
6. Set the Pre Invoice time period to 15 days unless you can establish that time period otherwise.
7. Determine the Growth Rates for the business.
8. Look at the Accounts Payable Statement to determine their ability to pay their vendors.

There are 13 numeric data entry fields required for data entry for the IPC analysis as follows:

1. Annual Sales Revenue for the entire business (no calculations required), e.g. $4,800,000. Get this from the latest Income Statement.
2. Corporate Tax Bracket Percentage for the business (no calculations required), e.g. Ask the CEO, CFO, Accountant, etc. for this information.
3. Allowance for Bad Debts Percentage for the business (no calculations required), e.g. Ask the CFO, Accountant, etc. for this information. Many Accountants typically discount the Accounts Receivable 2% to 5% for the Allowance for Bad Debts. That is what this value represents. Accountants typically change the discount percentage once per year.
4. Annual Sales Revenue for the Accounts Receivable being considered. Look at the Accounts Receivable Aging Report for the best customer. Determine the total amount of Invoices outstanding for the last month. Multiply that amount times 12 and that becomes the Annual Sales Revenue for that Customer, e.g. $100,000 last month x 12 = $1,200,000 per year.
5. Variable Cost for the Accounts Receivable being considered. Most of the time Clients do not know this amount exactly. Look at the latest Annual Income Statement and determine the Cost of Goods Sold (all costs except General & Administration, Plant & Equipment, and other fixed costs). The Cost of Goods Sold is sometimes shown as the Contribution to Fixed Cost. Divide the Cost of Goods Sold by the Annual Sales Revenue for the entire business to get the Cost of Goods Sold percentage which will be used as the Normalization Factor for the Cost of Goods Sold, e.g. $2,880,000 / $4,800,000 = 0.60 or 60%. The 60% is the Variable Cost Normalization Factor. The IPC data entry is the total Variable Cost. The Hard Cost of Goods Sold are the "Inventory of Bricks & Mortar" and the Soft Cost of Goods Sold are "Direct Labor Costs." The IPC does not differentiate between Hard and Soft Costs - only the Total amount of Variable Costs.
6. Fixed Cost for the Accounts Receivable being considered. Look at the latest Annual Income Statement and determine all General & Administration, Plant and Equipment Costs, and other fixed costs. Divide this total amount by the Annual Sales Revenue for the entire business to get the Fixed Cost percentage which will be used as the Normalization Factor for the Fixed Cost, e.g. $1,440,000 / $4,800,000 = 0.30 or 30%. The 30% is the Fixed Cost Normalization Factor. The Fixed Cost for the Accounts Receivable equals Fixed Cost Normalization Factor x Annual Sales Revenue for the Accounts Receivable, e.g. 0.30 x $1,200,000 = $360,000.
7. Average Invoice Size for the Accounts Receivable being considered. Look at the Accounts Receivable Aging Report for the best customer. Divide the total amount of Monthly Invoices by the total number of Invoices for that month, e.g. $100,000 / 40 = $2,500.
8. Average Number of Days Vendors and Direct Employees are paid prior to Invoicing. This is a difficult parameter to find on financial statements, so here is a reasonable estimate this is defaulted to 15 Days. A manufacturer is making a product who purchases raw materials from a Vendor 45 days prior to delivery of the manufacturer's product (assuming the Vendor offers terms Net due in 30 days implies the Vendor will be paid 15 Days Prior to delivery). The Direct Labor begins assembly 30 days prior to delivery (assuming labor gets paid every other week and are two weeks delayed implies the manufacturer pays labor about 15 Days prior to delivery).
9. Average Number of Days the Accounts Receivable being considered is outstanding (no calculations required). Look at the Accounts Receivable Aging Report for the best customer and use the number for the average number the invoices are outstanding.
10. Average Growth Rate in Revenue expected for next Year (no calculations required). Ask the Client what it is. They know.
11. Average Growth Rate in Revenue expected for next Year, if they had more Working Capital to create more Sales (no calculations required). Ask the Client what it is. They can estimate.
12. Average Growth Rate of Fixed Cost expected for next year (no calculations required). Usually this is smaller growth rate than sales.
13. Average Growth Rate of Fixed Cost expected for next year, if they had more Working Capital to create more Sales (no calculations required). Usually this is smaller growth rate than sales, but higher than the previous growth rate.