In planning and budgeting, numbers do not always represent a complete or accurate picture. As a budget rolls up, small errors can snowball into major miscalculations, which ultimately have to be explained to senior managers or, even worse, investors.
Budgeting systems can prevent such situations by providing built-in capabilities that help ensure budget accuracy. It is essential to have support for:
- Indicating whether a number should be treated as financial or non-financial
- Translating multiple currencies
- Viewing multiple currency rate versions (actuals, budgets, forecasts)
- Allocating portions of the budget to business units or departments
- Phasing budgets over a specified time period
- Creating detailed salary and asset budgets
Budgeting systems allow companies to design any number of zero-based, historical-based and rolling budgets and plans. This solution allows improvement of the accuracy of tasks such as calculations, allocations, phasing and currency translations, and shortens the time they take. Using guided workflow capabilities and alerts helps ensure that the enterprise remains on schedule and within guidelines. When a business change occurs, you can adjust the budget and save it to the database, relying on the system to automatically update numbers and reports affected by the change.
Forecasting systems allow companies to create statistically accurate forecasts that help you manage performance expectations, make tactical adjustments and achieve performance goals. With this solution, you can collect forecast information as frequently as needed over the Web, through Excel or from other business systems. This system allows you to generate rolling forecasts, check the accuracy of submitted plans, and receive automatic alerts that allow you to easily spot issues as they arise and take action.
Companies generally start a forecasting process believing that the exercise will help them align expectations, optimize operations and reduce risks. No matter how well intended, the forecasting process often results in inaccuracies and under promising and over delivering, also known as “sandbagging.” Inaccuracies result when companies simply increase or decrease last year’s result by a percentage, ignore the details and just look at the summary level information, manipulate the budgets, or fail to account for exceptions in last year’s figures. Forecasting systems can lead to more accurate forecasts by providing capabilities that:
- Check the reality of budgets, forecasts and results
- Provide unbiased, objective accuracy
- Provide alerts and insight into potential future deviations from plans and strategies
- Statistically seed detailed budgets and forecasts
- Generate and facilitate a rolling planning process
Check out the “Better Results through Better Planning” whitepaper to find out more about:
- The challenges in planning faced by companies today
- What to look for in a planning and budgeting solution
- The benefits of deploying an effective planning system