All your Budgeting and Forecasting questions answered: the Sequel!
Nov 7, 2023
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In this sequel episode of FP&A Today, guests Alejandra Boggione and Andrew Childress answer new burning budget and forecasting questions. Topics include budgeting in consulting firms, the link between forecasting and modeling, preparing for the budget ahead of time, static annual budget vs rolling forecast, challenges of getting funding for finance technology, and exploring Excel's versatility.
Scenario planning helps businesses proactively identify risks, develop contingency plans, and make informed decisions based on different potential outcomes.
Aligning the financial plan with the operational plan through communication and collaboration between departments optimizes resource allocation and goal achievement.
Implementing the right technology stack improves data collection, analysis, and reporting, enhancing the efficiency and insights provided by finance teams.
Deep dives
Scenario Planning: Best Case, Worst Case, and Reality
Scenario planning involves creating best case, worst case, and reality scenarios to anticipate potential outcomes. By considering different possibilities, businesses can be better prepared for any situation. Best case scenarios reflect optimistic projections, while worst case scenarios explore possible challenges or setbacks. Reality scenarios provide a realistic view of the business's situation. Scenario planning helps businesses proactively identify risks, develop contingency plans, and make informed decisions based on different potential outcomes.
Aligning Financial Plan with Operational Plan
Aligning the financial plan with the operational plan is crucial for businesses. Communication is key in achieving this alignment, ensuring that all departments and stakeholders have a voice in the planning process. Regular meetings and collaboration between finance, sales, and operations help ensure that everyone understands the company's goals, strategic direction, and financial realities. By fostering collaboration and communication, businesses can better coordinate their efforts, optimize resource allocation, and stay on track towards achieving their objectives.
The Role of Technology in Budgeting and Planning
Technology plays a crucial role in the budgeting and planning process, providing tools and platforms to streamline and enhance these activities. While many businesses still rely on spreadsheets like Excel, there are other technology solutions available that offer greater efficiency, collaboration, and data integration. Implementing the right technology stack can improve data collection, consolidation, analysis, reporting, and visualization, enabling finance teams to work more efficiently, make informed decisions, and provide better insights to stakeholders. It's important for companies to assess their specific needs, budget, and goals to determine the best technology solution for their budgeting and planning processes.
The Importance and Approaches to Forecasting Throughout the Year
Regular forecasting throughout the year is essential for businesses to track their performance, adapt to changing market conditions, and make informed decisions. The frequency of forecasting depends on various factors, including the company's industry, volatility, and key drivers. Some businesses forecast quarterly, while others may require monthly or even more frequent updates. The key is to strike a balance between keeping forecasts up to date and avoiding excessive time and effort. Adopting a rolling forecast approach can be beneficial, updating projections periodically and iterating on the forecast based on the latest information and market dynamics. By forecasting regularly, businesses can stay agile, identify deviations from the plan, and make necessary adjustments to align their trajectory with their goals.
Favorite Excel Features for Budgeting and Planning
Excel offers a wide range of features that can support budgeting and planning processes. Some favorites include Power Query, which facilitates data extraction, transformation, and loading for efficient data management. Pivot tables and VLOOKUP are valuable for data analysis and reporting, allowing users to summarize and visualize information effectively. Macros enable automation and streamlined workflows, saving time and effort. Each of these features contributes to the flexibility and versatility of Excel, empowering finance professionals to optimize their budgeting and planning activities.
This follows one of our most popular ever episodes (episode 19:Budgeting all your questions answered). In this sequel episode, new and returning guests answer all your new burning budget and forecasting questions and challenges. Joining us in the budget and forecasting war-room are:
Alejandra Boggione, FP&A Manager and Senior Business Controller, FASTA
