Quarterly Reforecasts Become Essential to Business Planning

Faster Budgeting and Quarterly Reforecasting Leads to More Strategic Planning

Four Star Freightliner is a freightliner dealership with seven locations throughout Alabama, Georgia and Florida. Each dealership has four lines of business: new truck sales, used truck sales, parts and services. The company’s slogan, “We’ll Keep You Rolling,” reflects the importance of its parts and services lines of business. According to the HDS Truck Driving Institute, the average driver clocks 45,000 miles per year. Truckers throughout the region rely on Four Star Freightliner to keep their vehicles in good working order.

Running a multi-location dealership requires careful budgeting, planning and forecasting. Four Star’s financial team relies on its budget to monitor the health of the business and track whether the company is likely to reach its goals, and to provide early warning if actuals may be off and pivots are required.

“We live on our budget. We look at it aggressively and we say, okay this is where we need to be to meet the goals and expectations that we have. Budgets and plans are a big part of how we operate,” explains Scott Coleson, Four Star’s Controller.

Challenge

Scott winces at the memory of creating the company’s budget using spreadsheets. “It was very cumbersome. It took two months to build, and another week to enter it manually into the ERP system, and in the end, it wasn’t very adaptable.” That lack of adaptability hindered the company’s ability to reforecast each quarter, and to assess how well they were tracking towards their goals. Spreadsheets also made it very difficult for Scott and his team to understand and budget employee expenses. Every year saw numerous personnel changes throughout the locations, meaning there were months when employees resigned, and individual dealerships needed to recruit replacements. Budgeting by individual employee would be far more accurate, but simply impossible in Excel.

Keeping up with revenue and cost of sales by location was equally challenging. We budget by location and department. Before Centage it was really a best guess for expenses, and then averaging out the other operating expenses. It was cumbersome,” said Scott. All of these challenges were compounded by Four Star’s rapid growth. In just a few years, the company grew from six to seven dealerships, and from 130 employees to 200.

Because the company, “lives by the budget,” Scott and his team looked for an alternative to Excel. “We’re growing, and we were struggling to keep up.”

Solution

In early 2016, Scott invited three budgeting vendors in to demonstrate their budgeting and planning platforms, and Four Star quickly settled on Centage for three key reasons. The first is the ease with which Scott can build a budget. The Centage platform features pre-programmed business logic and accounting rules, which ensure that all inputs are processed according to the company’s unique business structure, and automatically updates all outputs, such as the P&L, balance sheet and cash flow statement.

Second, the platform offers a comprehensive personnel budgeting module where company employees are entered either individually or in groups of similar work functions. Payroll related expenses are calculated regardless of whether the company has a calendar year or a fiscal year, and the correct expenses are automatically posted to the budget and accounted for. And finally, Scott was impressed with the ad hoc reporting. Centage delivers timely and robust data in visually meaningful reports and dashboards, which enables business managers to make better decisions, faster. Those reports help the management team assess where they are, and when pivots are required.

Benefits

Thanks to Centage, the budgeting process is greatly streamlined and far more accurate. Scott now spends two weeks or so creating the annual budget, as opposed to two months. More importantly, Centage has enabled Four Star to create accurate quarterly reforecasts, which have become essential to business planning.

“As a result, with Centage we’ve moved away from doing yearly budgets, and work off the quarterly reforecasts. We are able to spend less time talking about the numbers in the budget and spend more time on how we’re going to get there. Our budget sessions are much more strategic. Rather than dwell on the number to put on the line, our focus is: how are we going to meet it?”

The ad hoc reporting also provides strategic benefits to the company, particularly when it comes to comparing actuals to plan, and performing what-if scenarios.