This article will describe how companies with multiple business units process budgets and forecasts.
This article will describe the importance of forecasting with the best corporate performance management software and how it differs from budgeting.
Why is forecasting a good practice for all organizations? Here are five reasons:
While the budget is created one to two months before the year starts, the bulk of it is created up to fourteen months prior to the start of the month. For example, the budget is finalized in November for a company based on a calendar fiscal year, which is a year prior until the next November happens. Meanwhile, a lot can change in the various aspects of an organization regarding economy, industry, products, competitors, employees, and leadership. A forecast can more accurately influence decision-making.
A forecast should include the current year actual data for the closed months. It should also allow the departmental managers to modify the amounts for the remaining months. Additionally, copying the budget data to the forecast will allow managers to concentrate solely on changes in the forecast. You can show the prior year actual data as well.
Another example is a rolling forecast. This template exists for organizations that do not create a budget but they forecast monthly. In a five-year forecast template, it is recommended to plan the first two years quarterly and the last three years annually.
One other option for a monthly forecast is to enter an expected annual amount by each account. Create a calculation that subtracts the annual amount entered from the actual year-to-date data. Then allocate the remaining amount based on historical actual data.
Finally, we recommend using the Breakback template. This template allows a manager to enter a few amounts to create the forecast in October, November, and December:
The calculation of a variance is the difference between the actual expenses and the budget, the actual expenses and the prior-year expenses, or the actual expenses and the forecast. To calculate revenue data, subtract the budget from actual expenses. To calculate expenses, simply do the opposite. The reason for this is that a positive variance is typically good while a negative variance is typically bad.
The first step is to calculate and analyze variances. Then allow departmental managers to enter comments to document the reasons for the variances.
Variance reports can have comparison reports against the budget for both month-to-date and year-to-date data. Envision a middle section that allows for comments or a conditional format for a quick highlighting variances for review. Variance reports can also be an exception report that allows the manager to filter out variances over or under a specific percentage.
There are several ways of showing variances, but how management will create actionable items to prevent or correct the issues remains essential. Variance analyses help highlight trends, opportunities and challenges. Variances should be a precursor to a re-forecast. This can significantly affect hiring decisions, marketing spending, and strategy changes.
Companies utilize forecasting to resolve budget allocation or to plan for anticipated expenses for the upcoming year. Take the time to forecast. Use the tips mentioned above to help achieve those organizational goals without wasting any time. Learn more from Enabling World-Class Decisions, the executive’s guide to understanding and deploying modern corporate performance management tools.
If you need assistance in finding a corporate performance management solution or a forecasting tool, Solver has a team of experienced professional that can get your organization starting in building the right template for you.
Solver enables world-class decisions with BI360, a leading web-based CPM suite made up of budgeting, reporting, dashboards, and data warehousing, delivered through a web portal. Solver is reinventing CPM with its next generation solution. BI360 empowers business users with modern features including innovative use of Excel in the model design process. If you’re interested in learning more, our team is excited to hear about your organizational needs and goals.
What to Expect Plus Tips to Help You Take Advantage of All Focus 2018 Has to Offer
In this article, Sissela, a Solver visitor from Sweden, stopped by our Los Angeles office, and interviewed Solver employees for her school’s project on work experience.
This article will discuss one of the winning ingredients for Solver as an organization and definitely one of the reasons BI360 is as successful as it is: innovation. Continue reading
This article takes a closer look at the company culture at Solver.
In this article, I’ll be covering Solver’s culture, both internally and externally – and how that has changed the way I view work and my work ethic. In America, we work an average of 40-47 hours per week. According to Investopedia, “corporate culture refers to the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions.” Corporate culture has arguably always been important, but it’s only become so popular, almost a “buzzword” in the past decade, maybe because of the start-up phenomenon. Culture is often a prime factor in long-term organizational success. Also, a culture’s success depends on an organization’s business market, strategies and workforce.
And just like that, Focus 2017 has come and gone. For the planning committee at Solver, charged with the planning and execution of the 5th annual user conference for the community of BI360 customers and partners, it is bittersweet. To me, the best conferences can seem like summer camp for adult professionals, as you step out of your routine and your life to take up residence at a specific locale that is an all-inclusive on learning new skill sets, making new connections, and having fun. And Focus never disappoints in the context of this analogy. This is the fourth year I have attended the event, and it was such a joy to see familiar faces and share memories from past years with new faces at the ample networking opportunities. This blog entry will recap the highlights from this year’s Focus event.
This article will talk about what BI360 customers and partners can expect for BI360 Focus this late August.
Solver Global, along with its customers and partners, will come together in just a few weeks on Monday August 21, at the Hilton La Jolla Torrey Pines in San Diego, CA. The fifth annual BI360 customer and partner conference will be a space where we can share best practices, networking and hands-on learning opportunities to take your BI360 experience to the next level. This article will focus on the activities and experiences BI360 Focus attendees can expect this year.