How a completed budgeting, forecasting and analysis process only requires adding data in order to see real results
In the late nineties I was working with a large Southern California yacht dealer and came across a full-page ad in a trade publication advertising the Ocean Yachts (of Ocean City, NJ) series of sport fishing boats. The main ad copy read “Just Add Water”, implying that the product offering was so complete that the end user had no need to customize the boat or add any additional equipment. To this day, this ad copy is one of the most striking I have ever seen in advertising.
By now many finance organizations in companies of all sizes and industries have realized that an FP&A (Financial Planning and Analysis) software application should be purposely designed for the job at hand and not rely on users to engage in programming of the financial model and associated reports.
This is evidenced by the move from the traditionally popular spreadsheet-based budget and forecast models to the much more robust database-based FP&A software, available from an increasing number of vendors and offered to a variety of companies, from the very small to the enterprise.
There have been a lot of discussions in this blog and on financial websites why the use of spreadsheets in FP&A applications is a bad idea, so I will not elaborate on this topic here. All these discussions and finance organizations’ best practices clearly show that use of software that is vendor designed to accommodate customers’ FP&A needs far exceeds the performance, reliability and accuracy (and nowadays also relevance) of models done in spreadsheets.
That is not to say that spreadsheets (e.g., MS-Excel) should not be used in business and particularly in finance. In fact, many of the dedicated FP&A solutions are highly dependent on importing data from Excel. Many of the FP&A reports are designed to be routinely exported to Excel. The finest Analytics applications, often integrated with planning and budgeting software use Excel as an end-user, self-serve application to build presentation reports, using Excel’s vast collection of formatting and presentation tools.
As such, Excel relies on complete and accurate data to be provided by the budgeting application, and never uses its own formulas, functions and macros. The result is realizing the best of both worlds: The FP&A software’s solution provides robust planning and budgeting modeling with Excel supplying superb presentation capabilities with filtering and data dimensions manipulation (pivot table style) to allow users to see exactly the data they are interested in, then quickly change the view on demand.
When an organization employs the best planning and budgeting tools, integrated with the best analytics solutions, the traditionally tedious, painful and error prone processes (those that come around every year) turn into much simpler but a whole lot more powerful, accurate and complete processes.
Now that the processes are defined and implemented in the FP&A software, there is no need to endlessly troubleshoot and maintain convoluted financial models in a set of precariously linked spreadsheet workbooks. The required data is completely and accurately supplied to the analytics software, month after month.
This data comes from two primary sources:
- The budget model, using your assumptions, drivers and budget records.
- Actual accounting data transferred to the analytics module from the ERP or accounting software at the close of every accounting period.
The results, shown in forecasted GAAP compliant financial statements and other operations reports are formatted and presented exactly the way you want them to and the analysis and decision-making process can start with no further delays or the need to fix something in the model in order to make sense out of the output.
The work going into setting up the model, assumptions and drivers is appreciably simplified with the software’s built-in business logic and accounting rules. This results in almost real-time periodic analysis and reforecasting when appropriate, while providing management and other users of information the data they need in a format they can understand.
Once your model is set up and the link to actual accounting data is established, all you really have to do is add data.
Small to mid-market organizations rely on Centage Corporation’s Maestro Suite, which includes Budget Maestro™ to help them keep track of and manage their cash flow. Budget Maestro improves the efficiency and effectiveness of business budgeting and planning, financial forecasting, financial consolidation, and financial reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.