Rolling Forecasts and Multi-year Budgets for Microsoft Dynamics NAV

When it comes to budgeting using data from Dynamics NAV, 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.

Are you like most people I talk to who find budgeting to be a true pain in the neck?  Most CFOs and other finance team members I have spoken with about their budgeting procedures generally go from pleasant to exasperated in seconds as they detail their headaches putting together an actionable plan for their company’s financials in the coming year.

Furthermore, it appears to get more challenging to accurately plan for a whole year because variables, such as turnover costs or the cost of goods, can drastically change seemingly overnight.  These shifts in the business world can dramatically alter the plans for expenses versus revenue, changing the way executives want to proceed in order to stay competitive.  But we all know how important budgeting is to corporate success.  Budgets do the work of helping organizations live within their means for careful progress and hopefully, new levels of success.  However, it does not have to be as tedious as it has been.

Whether you are planning your finances for the year or just zooming in on a project, budgeting is necessary, but it doesn’t have to be as difficult as it has traditionally been for the executive team in the past.  Like most accounting systems, Microsoft Dynamics NAV has built-in financial report and budget designers, but for a lot of companies that are growing in size, these solutions are not up to par for effectively planning for a whole year.  Additionally, there are a good amount of third party budgeting and forecasting tools that are Excel add-ins, which allow users to hit the ground running with the familiar set of formatting for Microsoft’s ubiquitous spreadsheet application.  Tools that function on a proprietary platform, including the budgeting functionality found within Dynamics NAV, have a bigger learning curve for users because formulas and coding are not what most are used to in Excel and usually lack the flexibility to generate easy-to-use budget templates.  And there’s more.

 

There are several budgeting options that will modernize and strengthen your corporate decision-making in this chapter of global business.  In addition to Excel add-in solutions, on the horizon is web budgeting that will allow professionals to collaborate on a budget or forecast from anywhere they have an internet connection, so their input on a project, departmental, or company-wide plan fine-tunes the projection.   You can also decide whether you want to use a budgeting solution that stores the actual and budget data in an online analytical processing (OLAP) cube or a fully built, configurable data warehouse.

Also on deck: document management tools are beginning to connect with enterprise resource planning  systems (ERPs) and business intelligence (BI) tools in a newer product category known as content intelligence, which allows you to drill down into textual documents for more comprehensive actuals versus projection comparisons.  Mobile budgeting is coming down the pipeline, as mobile financial reporting is already a reality.  With all of the rapid progress in the technology sector, including independent software vendor (ISV) BI solutions for Dynamics NAV, how come rolling forecasts or multi-year budgets aren’t more popular in the planning process for CFOs and their fellow executives, considering that the variables involved are less stable?

Most organizations are planning in the annual, 12-month fiscal year format, probably due to the understandable level of comfort continuing a process that have proven itself over the years – and also due to the absence of a tool that empowers financial professionals to tackle a different kind of budgeting.  Whether or not we like to admit it, change can be challenging (in spite of working in a business world that is constantly changing), and even if we were interested in changing our budgeting methodology, your tool has to effectively support the new process. Dynamics NAV is a powerful ERP system that is globally deployed, but it does not offer the features or functionality to perform rolling forecasts and multi-year budgets in a flexible manner.

I completely understand why corporations are not moving their budgeting beyond Dynamics NAV – it can be quite an investment of time, energy, and money to do your research, shop for, and deploy a BI solution that offer you these functionalities.  A lot of companies avoid the cost altogether by budgeting manually in Excel.  And let me be clear: I think that manual budgeting and forecasting, regardless of whether it is fiscal, rolling, or multi-year projections, sounds like a surefire way to kill staff morale.  Today’s modern, dynamic ISV budgeting offerings allow you to adapt to the ever-changing landscape with accounting logic and reusable templates, saving time and mood swings.  You should know the terminology and concepts regarding these two nontraditional budgeting processes, so you can decide what will best fit your planning needs.

Rolling forecasts employ a fixed period, such as a 6 month window, but at the end of each month, your forecast will then include the month after to uphold the fixed term for profit and loss management.  If your rolling forecast for 6 months starts in July, you would forecast from July to December.  As soon as August approaches, your fixed period now will include August through January, then September to February, and so forth.  With a rolling forecast, you are continuously updating your plan in an effort to more precisely progress, hopefully with a more accurate indication of your financial future than a traditional, annual budget that is basically a year old by the end of the 12 months.

Multi-year budgets zoom in on planning for a longer period of time, with an aim at stability when it comes to income and spending.  This looks more like long term financial goal setting than a fiscal year budget.  The concept of multi-year budgets focus on shaping strategies that you implement today, but have an impact on company business in the years to come.  You can implement these processes – if you move beyond Dynamics NAV and manual Excel models and instead deploy best-of-breed budgeting solutions.

Modern budgeting solutions empower you to automate not just a traditional budget, but also rolling forecasts and multi-year budgets.  To streamline the generation of budgets and forecasts, today’s third party tools also empower you to plan at a higher level than your chart of accounts, which is 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 Dynamics NAV.

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