Can you back your numbers and decisions?

Generating an accurate and useful financial budget or plan is an essential part of the day-to-day operations of high performing organisations. Armed with accurate plans overlayed with actual performance, businesses can make informed and data-driven decisions that are based on fact, rather than feeling.

But how do we prepare accurate and useful financial budgets and plans? This is only achievable when they are directly linked to operational plans which drive revenue, expenses, and ultimately cashflow for the organisation.

Further, linking to operational plans ensures that the financial impact is understood and appreciated by those who can directly influence the financial performance of the organisation, such as department managers or line of business personnel.

While finance teams must play a role in partnering with the business to ensure financial performance is achieved, it is quite often the operational departments that can drive growth, profitability and control costs.

Let’s take a real-world example from a mining company. Critical to sales planning for the contracts team is their need to model out multiple sale contract options with existing and potential customers such as:

  • sales prices
  • timings of receivables
  • provisional and reconciliation payment timings
  • transportation methods


Each of these variables can have a significant impact, not only on forecasted profit, but also on forecasted cashflow.

This illustration can also be applied to other activities across the business, such as assessing the impact of alternative procurement strategies, or developing new sales channels.

Focusing back on the finance team, the same mining company will want to model out impacts of various FX scenarios on revenue, but also volume driven costs such as transportation – and the inputs to these scenarios will flow directly from the planning activities completed by the contracts team.

Having this level of sophistication is far easier to realise when using the right tools. 

Most of us are aware of the limitations of Excel – even if somewhat sophisticated models can be built, Excel models fall well short when it comes to easy collaboration across the business and fast-to-run scenario modelling.  

Fit-for-purpose tools make it easy to directly link operational plans such as sales, workforce/HR, marketing, manufacturing and distribution into the consolidated financial plans for the whole business.

Implemented in the right way, the outcome leads to accurate and useful financial budgets and plans that the business can trust. Finance may own the system, but each department owns the plan, which is the way it should be.

In addition to integrated planning, these tools provide the ability to analyse and compare plans more quickly and effectively. This further ensures accuracy, whilst also enhancing variance analysis against actuals.  Moreover, businesses can truly understand the impact of various economic and micro scenarios, providing them the confidence to manage and minimise the impact of these influences, or indeed capitalise on them.

So, do you trust your current spreadsheet-based models to give you the visibility, accuracy and flexibility to effectively manage your business in the 21st century?     

If you’d like to talk to us about how we can help your business build operational plans that drive accuracy and decision making, please reach out. We are highly experienced in implementing tools such as Workday’s Adaptive Insights and IBM’s Planning Analytics.

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