Cost is a major factor in any business. Without some form of cost control it’s impossible to the make the best use of scarce and expensive resources. Because of this, budgeting and the subsequent reporting of resource usage is key to improving performance. So what options are open to management to make this process both efficient and effective? The first place to start is to look at how budgets are assembled and then reported over time. For most organisations this will involve using spreadsheets, which they believe is cost effective. Or is it?
It is estimated that for a small organisation with just 10 departments, the number of individual spreadsheets required during the year is over 150. This is made up of:
- 11 sheets for collecting the budget (1 from each department plus 1 to produce a consolidated report).
- 11 sheets for each month that passes (1 for each department and 1 for a total) which compares actual to budget that can also collect a forecast, giving a total of 132 sheets for the year.
- 27 additional sheets at the group level (2 for each month and 1 for the budget) that gives alternative views of the data. This is because spreadsheets only allow a single view (e.g. rows showing accounts, columns months, while sheets display each department and a total company). Alternative views could include a comparison of departments sorted on variance against budget, and the top performing products (assuming that this level of detail was planned) over time.
- What happens if what they send back is subsequently changed by them? You wouldn’t know until a dispute arises as to who has the right version.
- What if you need to re-issue a spreadsheet, say to include new analyses? How do you know if they use that new ‘correct’ version to submit data? Of course if it is new data then the macros/cell references will pick up the wrong cells, which hopefully you should spot. But if the new sheet was correcting a rule error, then …..?
- Talking of rules, how can you be sure that all the cell rules are working correctly? Assuming that each spreadsheet had around 40 cell rules to cater for adding up and calculating variances (it’s probably far great than this) and that at the group level there were an additional 300 rules to consolidate results, then that’s over 18,000 rules to check. Assuming that only 1% are in error then this still leaves 180 errors!
For some time, specialist software companies have offered solutions that have been able to replace spreadsheets as the means to collect and consolidate budget submissions as well support the ongoing reporting and forecasting process. The only problem was the cost and complexity involved put many organisations off with the result that today only around 50% employ them for this vital management process. However, with the advent of cloud-based budgeting solutions, this route is now a viable option, as we’ll explore with one such vendor – Financial Driver. Financial Driver is a modern, cloud-based, planning and reporting solution. Cloud-based means that users do not need any software or hardware to run the application. In the same way organisations can conduct banking over the web, so they are now able to conduct budgeting, forecasting and management reporting. The way it works is that each company is given their own database that is accessed by a personal login. This user is able to define the budgeting requirements and how the organisation is structured along with the users responsible. This information is held along with any data within a secure central database, which users access through a standard web browser. Depending on their defined role, users are able to enter, submit and approve submissions; run multi-currency consolidations; report and analyse data. Because everything is centrally held, there is only ever ‘one version’ of both data and application to which all users refer. With a few clicks, an administrator is able to request personalised budget submissions from each user. Financial Drivers informs each user and tracks their response through an automated submission process. As deadlines approach, Financial Driver chases up users to make sure they comply to any budget instructions within the set time. Once complete, users are locked out from making changes unless authorised to do so. At all times the administrator can see the status of data and pull off consolidated reports as required, but without having to load data or manage spreadsheets. As well as making the process efficient – one client saves over 60 man-days each year by using Financial Driver, – it is also very cost effective. There is no upfront fee or annual maintenance, just a low monthly rental fee. And because Financial Driver is so simple it just takes a couple of hours to learn, which means no large implementation fees. At the current time Financial Driver is offering a ‘no fee’ trial so organisations can be sure of the benefits they would obtain, before they commit to buy.
As we approach the budgeting season, organisations are looking at how to improve their planning and reporting processes. Moving to cloud-based solutions like Financial Driver not only gives immediate savings in time, effort and improve integrity, but they also provide a platform from which the organisation can better control the re-planning or resources should things turn out different from what was envisaged. To find out more call Financial Driver on 0800 0193 898 or send a request via the contact page.