Rolling Forecasts and Multi-year Budgets for SAP Business One

When it comes to budgeting using data from SAP Business One, modern third party BI tools can offer the functionality you need to put together rolling forecasts and multi-year budgets, in addition to traditional planning, project budgeting, forecasting, and modeling. This article will explore today’s budgeting solutions options.

Is budgeting one of the most dreaded tasks in the realm of business – or do some of you find it exciting?  In my experience talking to CFOs, accountants, and other finance team professionals about the budgeting process, I haven’t gotten anything but a tightening of the facial muscles, a tensing of the body, exasperated sighs, and anecdotes of the tedious procedure of piecing together an effective plan for how a company is going to spend money for the upcoming year.

It also seems to get more and more difficult to effectively plan a year in advance as variables, like cost of goods or turnover costs, can spike without any warning.  This can drastically change the projections and breakdown of expenditures versus income, altering the course of action the executive team wants to take to remain competitive. However, budgeting is simply not something we can avoid if we want our companies to succeed.  Budgeting helps you and your company live within their means in an informed and intentional approach to progress.  And quite honestly, it does not have to be as hard as you think.

 

From fiscal planning to project budgeting, the process is inevitable, but it does not have to be as much of a hassle as it has been in the past.  Like most enterprise resource planning (ERP) systems, SAP Business One has built-in reporting and budgeting functionality, but for most companies that are competing and growing successfully, these “tools” are simply not meeting the modern demands of finance teams and executive teams that are trying to strategically map out the plan of action for the upcoming year.  First of all, there are several planning tools on the market that are Excel add-ins, which empower most finance teams that already are familiar with the formatting and formulas of Microsoft’s established spreadsheet program.  The proprietary interface of native budgeting capabilities within SAP B1 and other accounting systems have to be learned outside of the familiar skillset of Excel and generally lack in the flexibility to create user-friendly budget templates.  And that’s not all.

There’s plenty of options for budgeting that can empower stronger company decision-making in this era of around-the-globe, around-the-clock business.  Besides Excel add-ins, there are also web budgeting options on the horizon that invite collaborators, from anywhere there is an internet connection, to have input on a departmental, project, or company-wide, fiscal year budget.  Furthermore, you can pull your data from an online analytical processing (OLAP) cube or a fully built, configurable data warehouse that can store multiple types of company data.

Relatedly, document management systems are starting to integrate with ERPs and business intelligence (BI) tools, in a new product category aptly referred to as content intelligence, to expand the options for drill-down of actuals from the previous fiscal year.  Mobile budgeting is sure to be next on deck, as mobile financial reporting is already at bat.  With all the fast moving developments in technology, including third party BI solutions for SAP B1, why aren’t more CFOs and executive teams employing rolling forecasts or multi-year budgets to deal with the rapidly changing variables involved in budgeting for a company in today’s business world?

Most companies are still working within the traditional 12-month, annual fiscal year budgeting – partly due to the comfort level of continuing the process that has worked for so long and also due to the lack of resources to tackle a different kind of planning.  In other words, we hate change (despite now belonging to a global business culture where the only constant is change), and even if we did want to embrace a change to more adequately tackle the reality of budgeting, forecasting, and modelling for today’s marketplace, our tools are not sufficient.  SAP B1 is a globally deployed, powerful ERP solution and rightfully can boast a large customer base, but it simply does not have custom features built in to handle rolling forecasts or multi-year budgets in a flexible way.

It’s logical to me why companies are not moving beyond the accounting system – it requires an investment of time, money, and energy outside of the normal workload to research, shop for, and implement a BI tool that can offer these functionalities.  Instead, companies are choosing to avoid the pain of doing it altogether – or they end up doing it manually in Excel.  Manual budgeting or forecasting, whether it is a traditional fiscal, rolling or multi-year plans, seems like the definition of unnecessary “pain” to me.  With today’s powerful, intuitive third party budgeting tools, you can adapt to the constantly changing reality of running your business with the benefit of reusable templates and accounting logic that you can employ to cut the time and frustration you spend on this traditionally tedious process.

It is probably important to dive into the definitions of these two terms, as they might apply to you and your company’s budgeting procedure(s).  First of all, rolling forecasts are a fixed period, 12 months as an example, but at the end of each month, the forecast then includes the month after to maintain the period of plans for managing profit and loss.  If you do a rolling forecast for a year starting in July, you would forecast from July in the current year to June in the following year.  As soon as July is over, the forecast then shifts to include August to July, then September to August, and so forth.  With rolling forecasting, you get a continuously updated plan that is potentially a much better indication of the future than an annual budget, which is almost a year old projection by the end.

On the other hand, multi-year budgets focus on planning for over a longer period of time, in an effort to ensure stability regarding income and spending.  At a high level, you can create long range financial plans that look much further into the future than an annual budget.  This can help shape strategies that are implemented today, but impacts company business in the years ahead. And you can employ these functionalities – if you look beyond SAP B1.

Modern planning tools are capable of automating not just the annual budget process, but also rolling forecasts and multi-year budgets.  To expedite the creation of budgets and forecasts, modern solutions allow you to budget at a higher level than your chart of accounts, essential at a summary level.  Solver offers a budgeting module stand-alone and as part of the comprehensive suite of BI modules and would be happy to answer questions and generally review BI360’s easy-to-use Planning solution for collaborative, streamlined decision-making capabilities with SAP B1.

Leave a Reply