7 Indicators You Need Better Budgeting and Forecasting Tools

Matthew Dziak

The best budgeting and forecasting tools can make the world of difference for your Finance Function. Finance professionals love Excel, and rightfully so. It’s a convenient and flexible tool that can satisfy the needs of smaller data sets. However, there comes a point in time in a company’s journey, where Excel alone is no longer the ideal tool for planning, budgeting and forecasting. 

Now, some budgeting and forecasting tools can maximize the potential of Excel via direct integrations to your ERP and finance data via an Excel Add-in. For others, who require more robust planning and forecasting needs, a centralized FP&A Platform is the thoroughbred needed to get the job done.

Exploring solutions to improve your finance processes and optimize efficiencies is an exciting endeavor, and when you notice one, or more of the following indicators highlighted in this post, it’s time you kick your search for FP&A budgeting and forecasting tools in the next gear. 

1. When your finance team spends the majority of its time compiling data for analysis

Impactful analysis is the catalyst for sustained Company success, which explains why 63 percent of CFOs listed financial planning and analysis (FP&A) as the one function they wish to improve the most, according to Deloitte’s CFO Signals Survey. Planning, forecasting and deriving actionable insight from the gold mine of data available is the primary objective of FP&A and leads to desired business outcomes.

What is the dilemma facing so many Finance Functions?

80 percent or more of a finance and FP&A professionals’ time is spent manually gathering data from multiple sources and munging it together to make sense of it all. The reality is that only 20 percent of Finance's time is left to conduct forecasts, and meaningful analysis, which is where the true value in these roles lies. The reporting and analysis outputs are used by management to guide decision-making.

Wrangling data siloed in disparate systems creates a tremendously inefficient workflow for Finance. If your Company is experiencing sizable growth, speed and agility should be at the forefront of your processes. Overlooking opportunities or not having enough time to adequately conduct deep analysis can put you behind the curve with the competition. 

The opportunity cost lost due to a lack of timely financial insight and analysis will far surpass the initial investment in an FP&A budgeting and forecasting tool or Platform. 

With fire drill-like ad-hoc requests and weekly management desires for items such as Sales Metrics, time is of the essence, and the race to deliver is taxing. Retention and hiring are two of the greatest challenges facing companies today, and limiting your team's ability to make an impact due to a lack of tools is not only an inefficient use of their capacity to provide more value, but it also can leave them desiring more. 

2. When your Company seems buried in Excel spreadsheets

If your finance team is manually aggregating data, it needs a tool to work with said data, which inevitably is Excel for most. Excel is an extremely flexible and easy-to-use tool that satisfies the needs for many business units in a Company.

Accounting and finance professionals navigate their career paths relying on Spreadsheets to report, analyze and deliver necessary metrics in a visualized manner. There comes a point though, where Excel simply isn’t robust enough to handle large amounts of data or dissect it in a desired way.

Tools like our Platform can help power Excel users maximize the potential of their data. The Platform integrates directly with your ERP, extracting data with no-coding or exporting required, and automatically structures and cleans data for Finance’s use in a web-Platform or Excel. The ongoing ERP data synchronization means once a report or model is set up, the data can be automatically refreshed with reconciled transaction details with a single click via an Excel Add-in.  

Effective financial analysis goes beyond traditional financial data. It also incorporates operational data from your customer relationship management (CRM) and human resources (HR) software. 

Once the summation of your data leads to speed and performance issues in Excel due to overwhelming size, that is an immediate red flag that you are in desperate need of a fully integrated and Robust FP&A Platform. This is why 82% of CFOs and 85% Heads of FP&A expect to spend more time prioritizing advanced data analytics technologies and tools in Finance (Gartner Finance Trends Survey).

For more on this, be sure to check out our blog breaking down the criteria to consider when evaluating FP&A tools.

If it looks like this, a better way exists

3. When you reconcile finance data with other departments during management meetings

Scheduling a time that works for executives and decision-makers to gather during the same timeframe uninterrupted is a feat in itself. Keep in mind, the purpose of your management meeting is to make mission-critical decisions to reach targets and key performance indicators (KPIs). To come together and agree on a course of action requires an informed discussion.

If your management team is using financial information that is different from the data in other business units and departments,  everyone has a different version of the truth or operates from a different scoreboard. Inevitably, certain departments (and we won’t say any names ‘sales and marketing’) are bound to go rogue and bring their own metrics to the table. 

While it’s encouraging to see those outside of finance following the numbers, the reality is that everyone needs to be operating from the same numbers. For better or worse, your company metrics need to be reconciled and accurate to know where you stand. 

Mature Finance Functions facilitate strategic discussion with helpful insight and information. Great companies infuse their strategic conversations with this information to drive high-quality, data-driven decisions. 

Budgeting and forecasting tools consolidate both financial and operational data and metrics are reconciled, while being free from manual errors to ensure everyone operates from the same scoreboard of company metrics.

4. When you need to drive financial accountability into the organization

Accountability is at the core of all great companies. Knowing what is expected and where you stand in relation to targets is required to adjust course as needed to reach your desired destination. This mindset should permeate throughout your organization, not just in finance. To help achieve this, we recommend creating a responsibility matrix to pinpoint who manages what aspect of the company. 

For example, your Finance Department is responsible for managing vendors such as ERP providers (Netsuite and Quickbooks), FP&A tools (FutureView) and headcount, which might include a controller, accountants, FP&A analyst, among others. 

Finalizing a responsibility matrix will align these transactions and expenses across departments, essentially creating a P&L for each department. These P&L’s hold business units accountable, while ensuring they are adding the optimal value to the company. It establishes a temperature check for department heads, to avoid unnecessary expenditures, like adding headcount as revenue is declining. 

Attempting to gather all of these data sets from each department, across multiple systems and managing it manually in a spreadsheet without integrations or additional visibility into transactions, is a nightmare scenario for Finance Functions. 

It’s an antiquated workflow that requires countless hours of exporting, importing and manipulating data that could otherwise be automated through integrations and FP&A tools, freeing up more capacity for deeper analysis to uncover insight and deliver that “ah ha” strategic moment we all crave. 

5. When the process of compiling budgets and forecasts takes too long 

Finalizing a budget can feel like a milestone worthy of celebration. However, it’s usually finance celebrating the end of a dreaded, yet mandatory process. Your annual budgeting process should be fundamental in setting the course of action for the year, not a data aggregation exercise for Finance.

Unfortunately for most companies, the latter is an all too familiar reality. Finance teams must send out templates for budget owners to provide their metrics. Some of the many pain points of this process include chasing down late submissions, dealing with unsolicited changes to the template, not tying the data back to the source and juggling multiple spreadsheet versions. 

These lengthy budgeting processes nullify critical time required for management and budget owner discussion about decisions. To stay ahead of the competition, you must remain agile, and achieving strategic agility is only possible when you have scalable finance processes and leverage automation to optimize the use of the limited time we possess.

When it comes to Budgeting Methods, we recommend utilizing a hybrid approach of top-down and bottom up process. A collaborative budget process provides an annual opportunity to tailor KPIs and targets given the learnings of what has, and hasn't worked in the past, while factoring in the insights and expertise of budget owners and their business unit.

6. When new investors request more detailed financial reporting packages

Building off of accountability, further visibility into financial data is a typical requirement of new investors. If you recently raised a round of funding or seek to raise additional capital, investors will require advanced finance metrics and insights that you may or may not have processes to provide.

The more sound your financial processes, forecasts and metrics are, the more likely you are to arrange favorable investments, mergers or acquisitions. Venture capital and private equity firms like to have financial data and metrics structured in a precise format, so they can incorporate data from multiple companies to utilize the inputs in their models. 

Having the ability to work with automatically structured financial data is also a tremendous advantage for planning and forecasting. Compared to spreadsheets, FP&A tools expedite ad-hoc scenario analysis such as adjusting expenses by a certain percent and instantly generating its impact across specific or all business units (as shown in the quick GIF below), so you can adjust course and remain strategically agile. 

7. When you find it difficult to provide timely analysis post close

Accounting and controller functions are laser-focused on ensuring debits and credits equal and closing the books with precision. When you consider the role of accounting, it’s responsible for tracking what has already occurred (transactions, assets, liabilities, etc.). 

FP&A on the other hand, seeks to project a future view (see what we did there) of potential outcomes and prescriptive analysis to help reach company targets. When your FP&A team, who is responsible for forecasting and analyzing your metrics and producing actionable insights, is forced to sit on its hands and work on other tasks, waiting for accounting to close the books, the time to properly analyze is severely diminished. 

The ideal approach for FP&A to make the most of its time is by conducting analysis pre-close with available financial data. Analysis iterations are necessary, as multiple scenarios produce different metrics and outcomes, but getting to that point requires the latest financial information. 

FP&A tools offer integrations with your ERP and accounting software, to extract and transform your transaction and financial data for use in Excel with an ongoing synchronization and click-to-refresh capabilities. You can also centralize all of your financial and operational data into a robust FP&A Platform to control, slice and dice data in a single source of truth. 

Finance tools and expertise on-demand

Your Finance Function should have visibility into the current state of the company performance, control operational and financial data appropriately and disseminate metrics and analysis clearly to stakeholders in an timely, accurate and informative manner.

If that seems like a challenge or any of these indicators sound familiar, don’t fret, but it might be time to consider a new approach to your Finance Function. We understand the nuances required to operate like a mature finance function and are happy to help. We are a team of finance executives and technical professionals, who have been in your shoes, and designed our FP&A budgeting and forecasting tools and software with Finance in mind.

FutureView offers multiple software solutions and services necessary to transform your Finance Function, without the lengthy change management headaches. To take advantage of our solutions and learn more about how we can help, contact us and request a demo, we’d be happy to help. 

Budgeting and forecasting tools designed for Finance to deliver more value in less time