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As we all struggle to adjust to our new reality of social distancing and general economic uncertainty, it seems as if our expectations for the future are changing day-by-day, if not hour-by-hour.

It is hard to tell what next week will be like for businesses across the world, much less what next month will look like – or six months from now. However, with a good Corporate Performance Management (CPM) solution, your company can gain insight into a range of possible future scenarios, so you can start executing meaningful action items right now.

With the right CPM in your toolbox, you can get fast answers to pressing COVID-related questions, such as:

  • How will it impact my business if I let some employees go? 
  • What can I expect for cash flow, as things stand now? 
  • Which expenses should I cut – now and later?
  • Who are the customers that are slow to pay? 
  • What is the best case scenario of COVID on my business… and the worst?

If you are not sure how to find those answers with your CPM, or if you are not sure whether your current system provides this critical information, this article will help.

What Are the Two Essential Capabilities of Corporate Performance Management During COVID-19?

If you already have and use a world-class Corporate Performance Management system such as Solver, Adaptive Insights, or Prophix, you can breathe easy. You already have access to the tools you will need to answer your COVID-related questions.

Those tools are:

1. Forecasting

Due to the ever-changing nature of the COVID-19 pandemic, nearly every company across the planet is having to throw out and replace their 2020 budgets right now. Forecasting on the fly can be difficult if you are working from spreadsheets but, with a highly effective CPM solution, you will have the freedom to run new forecasts for every twist and turn as the coronavirus situation unfolds.

Some of the best forecasts to run include:

  • Payroll modelling / forecasting

As a business leader, you already understand that it is possible you may have to let a few employees go or do a temporary salary cut before we all return to “business as usual.” This forecast helps you clearly identify the effect of your staffing strategy, so you can be more confident that you are making the right choice.

  • Sales modelling / forecasting

Perhaps you are not looking at staff reductions. Essential industries such as healthcare or food and health manufacturing are experiencing a steep rise in sales as a result of the coronavirus. However, whether your sales are on the rise or your company is facing a temporary slowdown, it is critical that you have accurate, timely insight into what you can expect for sales and revenues in 2020.

  • P&L, Balance Sheet, and Cash Flow forecasting

It is always a good business practice to keep a close watch on your P&Ls and Balance Sheets to make sure your financials are in order. With the abrupt market shifts we are all seeing right now, it is more important than ever to closely oversee changes in your operating, investing, and financing cash flows as you update your strategy.

2. Reporting

In an emergency, it can be difficult to sort through the sea of reports available to you from a Corporate Performance Management solution, so here is your quick guide to the essential reports you will need right now.

  • Multiple forecast versions compared

Gain insight into your organization’s best-case scenarios, worst-case scenarios, and everything in between using this easy-to-understand comparison report that maximizes your forecasting vision.

Actuals vs. Budgets are handy when your budget fits a predicted scenario, but we think it is safe to guess that your budgets do not quite match up with your reality right now. This report replaces your budgets with forecasts, so you can perform a more accurate actual vs. “budget” comparison that is based on the most up-to-date data.

  • Reports focused on vendor and payroll expenses

It may be time to cut expenses soon, so knowing which of your expenses are “expendable” may be critical information for your company. This report gives you the numbers you need, so you are prepared to cut back if and when that is required.

  • Customer aging receivables

Right now, every company across the world is anxious about the future and rethinking their expenditures – including your clients. By using reports focused on customer aging receivables, you will get quick and accurate insight into which of your customers or clients are late to pay, so you can check in instantly.

Not Using a CPM Solution Yet? There Is Still Time.  

If you are relying on unwieldy spreadsheets or the limited reporting options included with your ERP, you are probably frustrated at the lack of insight you have.

In truth, lack of insight can be a big problem for companies right now, considering how quickly the economic landscape situation is changing. If you are ready to get accurate, up-to-date financial and operational data at your fingertips, including easy-to-read KPI dashboards, planning tools, and a secure data warehouse to house all your data, now is the right time to get your Corporate Performance Management solution set up.

Setting up a modern CPM solution is easier than ever, but you will still need to make sure you choose the right solution for your needs. Though you have a wide range of strong CPM solutions available to your company, your ideal solution will depend on your unique business setup, size, industry, integration needs, and objectives.

However, to make sure your CPM system meets your precise needs during the coronavirus situation and beyond, you will want to ensure you choose a CPM that fits these requirements:

  • Cloud-based solution

If your workforce is largely working from home (WFH) for the duration, now will not be the right time to deploy or support an on-premises / in-office server solution. A cloud-based CPM is more convenient to implement and support during a disruption, and it is also more convenient to access for consultants working from home.

  • Rapid deployment

A CPM that takes months to deploy will not help you solve the situation right here and now. Cloud-based solutions are faster and easier to deploy than on-premises solutions, and CPMs that include pre-built vendor report and forecast templates will get you analyzing your evolving numbers the same day your solution goes live, so you can answer your critical questions instantly.

Learn More About Your Options for Corporate Performance Management

If chosen carefully, effective, cloud-based CPMs can help you maintain your agility with quick decision-making during the coronavirus or any other unexpected setback.

Ready for some advice that will help you determine which CPM is right for you? We can help.

Since 1996, the global team of CPM experts at Solver have helped companies like yours successfully navigate the rapidly changing business landscapes that define our modern, global commerce world. We are happy to share our expertise with you, so you can find your path through this unexpected and unprecedented worldwide situation.

Truly, you can ask us anything about CPM. We promise you a careful, well-reasoned answer that makes sense for your exact needs. (We do not like one-size-fits-all answers, and we suspect you do not like them either.)

 

We guarantee that when you contact Solver, you will get the guidance and help you need to understand all your CPM options, so you can confidently move your business forward in all situations, including right now.

Ask Solver a Question.

 

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This article will describe how organizations leverage planning software to increase efficiency.

This article will describe a real life example of a manual application of BI360.

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This article focuses on the benefits of using cloud-based software.

Image taken Shutterstock.


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This article will highlight essential reporting and analysis features in Corporate Performance Management solutions.


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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:

  1. A forecast is usually a much quicker process and involves fewer employees.
  2. A forecast is entered at the general ledger account level while detailed templates, such as personnel templates, are not used.
  3. A budget is a company’s intention for the coming year, while a forecast is the most up-to-date expectation of what will happen over the remaining months of the year.
  4. The budget is finalized prior to the start of the year while a forecast can be created monthly or quarterly once the year has started and actual data can be reviewed.
  5. Many organizations create multi-year forecasts while budgets are only for the coming year.

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.

Companies can impact their bottom line by forecasting on a regular basis.

An organization will be much more agile by forecasting monthly, as it can affect the following decisions:

  • Expense reduction and tightening up the authority to spend money.
  • Employee raises, new hires, and terminations.
  • Capital expenditures reductions or increases.
  • Strategic planning and modifying initiatives.

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.

Templates

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 desired net Income of $600,000. This is the main driver of the Breakback template, and the only input that is mandatory.
  • Increase all administration expenses by 3%. All of the departments are available for a global increase or decrease across all accounts.
  • Increase administration full-time salaries by 6%. All of the accounts are available for a global increase or decrease across all accounts.

Variance Analysis

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.

Best-practice Recommendations on Variance Reporting and Analysis Processes 

 

  • Provide variance reports to each department manager.
  • The finance department should meet with each department manager to review the variances and discuss any concerns and successes.
  • Build an input form that stores comments for all departmental material variances.
  • Concentrate on the larger variances and discuss with the executive management of the company.
  • Make changes to the strategy and initiatives of the organization if needed.
  • Continually re-forecast and make decisions regarding the forecast.
  • Create a forecast then the variance reports should be off of the forecast first and the budget second.
  • Document the action items and review them at the start of the next meeting.

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.

This article focuses on the importance of budgeting with a corporate performance management solution.
budgeting
Budgeting is a topic that is not very popular in many organizations. It can be an extremely time-consuming project for many employees. This is why it is important to communicate the significance of a budget to all employees so they take pride and ownership of it. Don’t make complex templates as the goal in estimating for the coming year. If employees can’t have small variances, then they will make decisions that only impact their results against the budget and not what is in the best long-term interest of the organization.
Your budget should should be an approximate estimate of how the company will do in the coming year. Provide information on how investment money can be spent. This is based on the strategies and initiatives of the company. The goal should not be to budget down to each dollar.
For example, one company budgeted down to an employee cost of $6.52 per month per employee. The company was asked whether the cost could be estimated as a total for each department, but they claimed they needed it down to the dollar. However, budgeting at the department level and allowing a five percent variance would have had no impact on the decisions that the company made. Another important item to ask yourself is “what is an acceptable variance for an organization?” For instance, if there is a five percent variance in the revenue, then would this impact the decisions that the company will make in the coming year?
 

Personnel Budgeting Template

 
Personnel budgeting has an immense impact for organizations due to the high proportion of costs of an organization. A personnel budgeting template has similarities across all companies. There are many variables to consider, such as the type of raise, how many raises, overtime, bonuses, commissions, taxes, benefits, and IT costs to name a few. It is also important to know whether to budget by employee or by position.
Budgeting by position enables an organization to ignore employee names, terminations, and having to hire employees to replace a terminated employee. It also allows budgeting by multiple employees. As an example, a template can allow a manager to input how many accountants should be employed, what the average salary is, and what the average raise would be. If a company is budgeting by employees then each accountant should be listed. The employee’s exact salary, his/her expected raise, and all other information specific to each employee should be included as well. Budgeting by employee will be more accurate if there is little employee turnover, but it also requires more work.
Other items to keep in mind with personnel is how to allocate monthly salary, which impacts tax and benefit calculations. Allocate salary evenly by work days, by calendar days, and by pay periods. There are other ways as well. Another item to consider is separating out full-time and part-time employees, as there may be differences in the benefits that are allocated to part-time employees, such as overtime and 401k. These are all calculations that must be built into the payroll form.
 

Assumptions Template

 
A great first step is creating an assumptions template, which allows an administrator to enter data. This will impact the calculations of many templates, and it does not have to be hard-coded into the templates themselves. This data will flow from the form into all other templates. An assumptions template should include payroll tax rates, a worker’s compensation rate, and a benefit rate. The number of days in each month also matter.
The data from the assumption form will then flow into the payroll form.
There may also be a need to allocate an employee across multiple departments. In this case, there are two options: 1) Budget every employee to a “dummy” department and then allocate the salaries, taxes, and benefits in new template. 2) Upload the employee information into each department and enter the number of hours allocated to each department. This ensures there is an administrator report that checks to verify that an employee does not exceed 2,080 hours a year.
Many companies use another template called the capital expenditures template. This particular template allows users to enter capital expenditures that are projected into the coming year. This also calculates depreciation, typically on a straight-line basis. The asset type is typically chosen because each asset type has a specific life. A capital expenditures template should include asset type, department, purchase description, purchase month, purchase price, and quantity. The capital expenditures and the monthly depreciation are summarized at the bottom of the template.

More information

If you would like to get a better understanding of the budgeting templates above, you can download the free ebook here. Beyond using the right templates, it is important to have the right team and infrastructure in place to implement a successful budgeting strategy. Take the time on the front end to set budgeting goals that line up with your overarching organizational goals.
We also recommend to ask for help! By asking for help within the right channels, you can ensure the right sounding board that can guide you through the process with minimal time wasted and designed for maximum efficiency. At Solver, we have a team of experience professionals that have taken on countless projects like this one. Between the power of BI360 and their expertise, you have all you need to set yourself up for success.
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.

This article discusses corporate performance management (CPM) tools and examples of effective strategy, goals, planning, and analysis. 
 
budgeting, reporting, data warehouse, power bi, dashboards
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