Stride into 2020 with a stronger, more efficient budgeting and planning process

We are nearing the festive season. The flowers are slowly starting to bloom, new leaves are appearing and there’s warmth in the air. Yes, it’s nearly springtime and winter is bidding us adieu. Not only does this mean that we are in the first quarter of the New Year, but we also need to get our budget planning for FY20/21 underway.

Finance teams are under pressure to close out the current financial year and with that comes the challenges of planning and budgeting for the new financial year. During this time, a robust business plan is crucial to the finance function and at the heart of planning and budgeting are the tools used to support the finance teams.

Manual processes and tools put businesses at risk

For many businesses, planning and budgeting is a lengthy process, which takes up the majority of the resources. Finance teams end up spending too much time on administrative tasks related to these processes – collecting, consolidating and reconciling data from spreadsheets and emails –leaving little time for analysis, strategy development and target setting. And to top it all, these time-consuming, manual tasks often results in guesswork and unreliable information, making it near impossible to provide solid forecasts based on accurate, historical data.

This impacts the business in many ways including:

• Lost time in collecting updated data from multiple departments and validating assumptions.
• Lack of collaboration between stakeholders leading to extended turnaround time to source time-critical information
• Slow response to market changes and new opportunities resulting in an inability to make effective and timely decisions.

There are four practical ways businesses can ensure that they are prepared to see in the new financial year.

Periodic and rolling forecasts and budgets

Periodic forecasts can help businesses avoid the perils inherent in making static assumptions about business performance months ahead of time. These enable finance teams to revisit plans regularly and reforecast where necessary, based on new information. Rolling forecasts support continuous planning for a set period in advance. For example, if a company’s rolling forecast period stretches 12 months into the future, as each month ends, the numbers recorded that month will be used to add another month to the forecast. In this way, the forecast horizon continues to roll forward, based on the most current data available.

Access to accurate data

Budgeting should be based on solid business data. It is required that the finance team builds rapport with other functions to acquire information from them that is vital to the overall health of the business.

Accordingly, finance teams should be in regular contact with other parts of the business throughout the budgeting process, to deliver current and more accurate data, crucial for timely decision making.

Planning for contingency

Finance teams may not be able to plan for every single scenario, but they should have a general idea of what trends in the industry may cause waves in the months to come.

While there’s no crystal ball for budgeting, the one-two punch of rolling budgets and careful analysis of the market and industry trends should offer deep insights.

Break up with spreadsheets

There’s no other way to put it: static spreadsheets used for budgeting and forecasting are not effective and are often unable to offer accurate and timely financial information.

Planning and Budgeting allow businesses to have a regular process where clear collaboration, greater control and alignment of the organization builds accountability, reduces planning cycle times and improves visibility.

Before it’s time for the next financial year, get your budgeting processes in order. Your future self in Q1 2020 will thank you.

By Graeme Burt, VP and Chief Commercial Officer–Oracle NetSuite, JAPAC