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Strategic Budgeting and Forecasting: Five Questions to Consider

Strategic Budgeting and Forecasting: Five Questions to Consider, Centage

While spreadsheets have long reigned supreme as the foundation of budgeting and forecasting for many organizations, the shortcomings of this legacy, siloed tool have become too hard to ignore. Relying on archaic spreadsheets to guide complex business models automatically puts your organization at a disadvantage – sacrificing time and accuracy while stunting strategic decision making. As we kick off the new year, we invite you to consider how to improve your overall budgeting and forecasting process, especially as companies face new, unique objectives and challenges in a post-pandemic world. Start by asking yourself the following 5 key questions to evaluate whether the tools you have in place are working for you and not making the process more difficult, slower, or less accurate.  If you find yourself coming up short, consider this an opportunity to make a change not only for the long-term success of your organization, but to finally find that ever elusive peace of mind you and your team deserves.    

5 Key Questions to Consider About Your Budgeting and Forecasting Process:

  1. VisibilityHow do I get the most detail and accuracy with my budget? Do we have the data we need readily available?

Accuracy is the critical to the budgeting and forecasting process.  Spreadsheet programming does not enforce the accurate flow of transactions throughout the model. Users can define the formulas and flow as they please, which means they can inadvertently violate your business logic and/or established accounting standards.

A modern FP&A solution with pre-programmed business logic and accounting rules prevents users from making such mistakes. Within a menu-driven environment featuring drop-down lists and tables, users select from each budget area, for each budget line item, either globally or individually, and are empowered to select unique defaults, drivers, and other logic. These tools then take care of applying and proliferating the logic throughout the model, automatically and accurately.

  1. Confidence Am I confident in the numbers coming out of the model? How valuable is my budget for managing the business next year?  How can we plan for an uncertain economy?

Freed from the shackles of a siloed, legacy tool like Excel and managed instead within strategic FP&A solutions, budgets become living, evolving documents that finance teams can use as an in-house planning tool, updating monthly, quarterly or on an ad-hoc basis.  These tools offer an accurate forward-looking view of your company’s general ledger, allowing you to quickly and easily perform:

  • What-if scenarios
  • Forecasting
  • Budget vs. actual performance reporting

Additionally, with just the click of a button, you can turn that data into comprehensive and easy-to-use reports featuring as much or as little detail as desired. Visual dashboards let your management team track up-to-the-minute performance against the goals defined in your business plan.  Consider this: can your spreadsheet do that? 

  1. CollaborationHow do we create more collaboration across the organization for teams to operate and submit their own budgets? Who should be involved? Does everyone involved understand their responsibilities?

It’s impossible for finance to have visibility into every detail and every driver.  Strong collaboration across the organization is essential for a complete understanding of performance.  Not to mention, as a distributed and remote workforce becomes the norm, collaborative tools are vital to business success. 

Across all business functions, flexible, cloud-based tools are essential to seamlessly sharing information and insights, and budgeting and forecasting is no exception.  Spreadsheets were not built to support and sustain the requirements for conducting business today.

By relying on cloud-based planning and analytics tools, collaboration is simple and seamless across the organization. As each contributor enters financial information and transactional data, those inputs automatically ripple through the budget. All relevant fields, accounts and ledgers are updated, tying all data into the same cloud-based, centralized database, ensuring everyone sees the same financial data, or whichever portion of the data they need to see. That extends from the most meticulous operational details to the highest consolidated financial roll-ups. The financial staff and C- level executives have comprehensive information from every corner of the operation, always updated in real time without manual collection or consolidation.

In addition, modern FP&A solutions promote increased collaboration side-to-side between operations and finance. There is also more collaboration top-to-bottom; importing actual results allows continuous comparisons to plan – bridging the gap between the strategic and operational plans. In short, everyone sees a single version of the truth.

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See how you can transform your planning, budgeting, forecasting, and reporting with Planning Maestro.

Strategic Budgeting and Forecasting: Five Questions to Consider, Centage
  1. AgilityCan I run as many what-if scenarios as I need? How easily can I create and track an accurate budget from the plan?

If anything, the past two years has taught us that ‘being prepared’ for all scenarios is lifeblood to long term success in business today.  Financial professionals must have the power to make changes to a model to test the impact of multiple scenarios quickly and easily. Stubborn spreadsheets limit this ability and impede the ability to implement strategic changes – or essential pivots – across the organization.

Modern FP&A tools ensure every aspect of the model automatically conforms – and automatically adjusts – to your business logic and accounting rules. Because it’s pre-programmed, the coding behind the model will never break. Unlike spreadsheets that require modifying the underlying model to ensure that formulas are still accurate, innovative FP&A solutions empower you to simply delete and add and the model adjusts itself.

These pre-programmed rules promote maximum flexibility, allowing you to apply them wherever needed. This means you can test any scenario or plan with full confidence that your budget will always create accurate forward-looking balance sheets, cash flow statements and P&L projections that are synchronized to your underlying budget.

  1. AutomationHow can we be proactive, rather than reactive, in planning?

In the wise words of Ben Franklin, “By failing to prepare, you are preparing to fail.”  One might argue that by continuing to rely on spreadsheets for budgeting and forecasting – with limited capability and lots of room for error – to predict how the year ahead will unfold and to develop, test and deploy contingency plans as results come in, you are failing your organization and yourself! 

With the proliferation of innovative tools, machine learning, and automation available today, the finance team’s job has expanded and become a more critical part of the organization’s strategic planning. Through the adoption and use of technology and digital tools, organizations are experiencing better and more accurate forecasting, decision making and planning.

Accurate, synchronized forecasting of critical financial statements powered by modern FP&A solutions, can deliver a direct line of sight into the future financial health of your company. Producing accurate and timely statements – and gaining immediately actionable insights from them – is critical for understanding what’s going on in the business and assessing the financial impact of corporate decisions.

Plan for More Strategic Budgeting and Forecasting

The truth of the matter is, as a contributing member of the finance team, you are critical to the success of any business.  As a result, and for the benefit of the entire organization, you and your team should be armed with modern, strategic tools to deliver better insights and drive more confident decisions.  Consider how the legacy tools you rely on are holding you back. Stunting growth, limiting agility, and preventing critical collaboration. Take a moment to ask yourself these important questions and truly evaluate your current process budgeting and forecasting and the tools you’re using to plan for your business’ future. 

Centage Corporation’s Planning Maestro is a cloud-native planning & analytics platform that delivers year-round financial intelligence. With Planning Maestro, Centage offers the sophisticated features needed by small and mid-market organizations to integrate budgeting, forecasting, and deep data analysis within one easy-to-use, scalable SaaS solution. For more information on how to modernize your office of finance with intelligent planning, view our product demonstration video, or call 800-366-5111.