Collaborative Planning – Everyone’s an Expert

Exact Planning Brings Agile Analytics to FP&A

Steve Mohun

This is the third in a series of posts describing how Exact Planning unclogs the FP&A information bottleneck that prevents finance professionals from achieving agile Balance Sheet, P&L and Cash Flow Planning results.

Department Managers spend almost all their time working with customers, vendors, employees and other managers.  They’re an ideal source of actionable operational intelligence.  But for most businesses there’s just no good way to tap into all that great data.

Most Finance Departments still use Excel for their Budgets. Every model is designed by someone in FP&A, probably an accountant with expert Excel skills. But Excel is really awful for Budgeting and even worse for collaborating with managers.  If you’re reading this now, you probably already know that.

Lately a lot of companies have been migrating to cloud based EPM/CPM software solutions which are promoted as ‘better than Excel’.  Eliminating broken links and formula errors is a big improvement, but it takes more than spreadsheet automation to make planning truly agile.  Survey after survey reveals that the overwhelming majority of Finance Professionals want to be more strategic.  So, what’s wrong with existing solutions?

To begin with, most EPM/CPM input forms aren’t intuitive for department managers.  Everyone works from the same list of revenue and expense accounts that use role based permissions to limit access to many of the items on the screen.  Accounts that can be edited don’t appear in any particular order, making it hard to tell what goes where.  Basically, department planners work with an accounting form designed by accountants (the P&L).  FP&A usually provides support depending upon the skill level of the budget coordinator.

And not all data is equal.  Some numbers are easier to plan than others.  For example, Advertising and Consulting are basically monthly spending estimates, conversely, Depreciation and Revenue Recognition require supporting calculations so offsetting and related activity is reconciled (i.e Revenue Recognized is equal to the Decrease in Deferred Revenue).  And, of course, the accounts that change the most, like Sales and Employee Spending, require the most complex calculations.

Every time FP&A wants comprehensive Financials they need to lock users out of the system so they can calculate offsetting and interrelated outcomes. Usually the only time they publish Financials is for the Budget, after updating the Rolling Forecast or to test a Scenario.  It’s hard to be analytical when you have to choose between incomplete or stale data.  Most of the time sales updates never even make it to the P&L because nobody wants to recalculate waterfall reports every other day.

Exact Planning uses Account Intelligence to learn the accounting treatment for every account in any company’s G/L which makes it possible to organize accounts into separate activities so department planners can budget and update accounts belonging to activities that they recognize and control, one activity at a time.

And Exact Planning calculates and reconciles all offsetting and related activity for every account.  For example, any change to the Sales Forecast is automatically accounted for on the Balance Sheet, P&L & Cash including account activity for things like renewals, sales quotas, sales commissions and cash far into the future.

Exact Planning makes everyone a planning expert without any training in accounting.  Which means Finance Managers can be more strategic and maybe even take some time off around the holidays.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s