It’s no secret that most financial teams experience difficulties in their financial forecasting processes. There are many elements that are bothersome including accuracy, ease of use and timeliness. It is the latter which we will be focusing on in this article, with a 3-step plan that reduces the amount of time your finance team spends on forecasting.
Step 1: Create a rolling monthly/quarterly forecast
The annual budgeting model no longer works for most companies. The exercise of benchmarking and planning for the financial year is one of the largest time-consuming tasks. Given the nature of business, an annual budget, which will then be amended throughout the year, isn’t the most efficient way to forecast. A monthly or quarterly budget is a much more agile way of reacting to events, allowing you to forecast accurately.
Step 2: Make sure your team is on the same page
Often, only one or two employees are familiar with a business’ budget model, which is usually built with many Excel spreadsheets. The problem with this is if team members leave, their knowledge goes with them. The second step to cutting out the time-wasting in forecasting is to make sure duties are assigned to all the necessary people in the budget.
This includes having a clear plan of when decision makers need to get involved. All employees working on your budget need to know their part in the model and who they answer to, so you can work as one coherent unit. Clear duties relating to your forecasting process will allow it to progress in a straightforward way.
Step 3: Move away from Excel spreadsheets to one online, centralised system
In line with the above step, you not only need your team to be on the same page, you need all your financial information in one area too. Excel spreadsheets are great, but – as you expand – multiple spreadsheets are not ideal for a sophisticated forecasting model. They can be prone to errors, don’t have workflows and numbers have to be consolidated manually, along with a host of other time-consuming actions.
Using one centralised system, you can collaborate your spreadsheets and automate your processes. This will not only provide you with a more reliable and accurate way of forecasting, it will save you a whole host of time in the long run.