Having worked in finance for many years, we all understand the power of Microsoft Excel. With all of the advancements in accounting technology in recent years, Excel (or Google Sheets) is still central to so many business processes that finance teams run. Probably too many, but that’s a topic for a different post.
One task that Excel is frequently used for, and in fact, one of its primary use cases, is the creation of budget and forecast models and reports. That said, many businesses we deal with eventually outgrow Excel as their primary budgeting and forecasting tool.
One challenge FP&A and finance leaders have when it comes to investing in FP&A solutions is justifying the additional cost of investing in a tool like NetSuite Planning and Budgeting or HFM. This post looks at ways that investment will benefit your business.
1. Single source of truth – Benefit: Consistent outputs
As opposed to spreadsheets, an FP&A tool will provide a platform to bring all your data together. Financial data is pulled from your ERP system, while Budgets and Forecasts are produced and live in the tool. Different scenarios can be produced from the same data set and versions stored for comparative and historical purposes. Budgets and forecasts in the FP&A tool will be locked, preventing users from changing them after they have been published.
Everybody having access to the latest set of numbers is the minimum requirement for a team to build trust in their outputs.
2. Speed of thought analysis – Benefit: Ability to quickly find variances
Being able to analyse numbers in real time by drilling down to find variances or comparing scenarios increases the efficiency of your FP&A team. An FP&A tool should include the ability to drill right back to the source transaction in the source system, giving the user a line of sight from published numbers to the underlying transactions.
The usual approach of collating data in a spreadsheet and using pivot tables to perform analysis is greatly enhanced by storing multiple dimension and their hierarchies in an FP&A tool, allowing real-time pivoting of any level against any dimension.
3. Platform for collaboration – Benefit: Ability to work anywhere
A modern FP&A tool based in the cloud is a platform for collaboration, allowing your team access to work from anywhere. Data integration, updates, and commentary made in a tool are available in real time to all users.
One major benefit is being able to store and run a task list in an FP&A tool, tasks can be assigned to different users, and the process of completing the tasks is managed through reporting and control.
4. Process automation – Benefit: Increased efficiency
Automation of data collection, standard calculations, and forecast preparation gives the benefit of efficiency, allowing users to concentrate on analysing the data instead of pulling it together.
Greater automation also reduces lead times, for example, being able to report faster so the team can get to planning and analysis. Letting the system do the work adds to the consistency of the output and removes chances for manual error.
5. Auditability, control and data security – Benefit: Control of data
Modelling in a tool means setting up calculations and assumptions that will be consistent across scenarios and users, enabling businesses to rely on the data quality and the end results. Calculations built in the system can be audited at any time,e and control can be had by programming an FP&A tool to run a consistent process.
FP&A data can include unpublished numbers, personal employee data, and confidential planning scenarios, all of which need to be secured from the outside world and internally to authorised users to avoid data loss and reputational damage.
Conclusion
This is the first post in a series that we are putting together, in conjunction with Ed Graham from GK EPM, aiming to help finance leaders assess an investment in an FP&A application.
This post should be beneficial to people who are looking to move their budgets from Excel to a more secure and controlled environment. As well as the processing and automation benefits one obvious benefit to leadership is increased control and less reliance on team members.
Hopefully, you found this beneficial. In future posts, we will look at differences between specific FP&A tools such as NSPB and Oracle EPM, challenges you will encounter when implementing both, and how AI can help your forecasting.
If you have any questions on EPM and FP&A solutions, reach out to our team for a free consultation.
