How to digitize the work with planning, budget and forecast

The financial planning process of a company involves a series of steps that focus on the company’s ability to make the best use of free capital through investments and other activities to potentially achieve its financial goals. Most financial goals often focus on savings, returns, and real estate investments to develop a roadmap for financial freedom and are based on the company’s strategic plans overall.

The classic financial planning process is a continuous process that includes the following elements.

Status of the current situation

Agreement of goals

Evaluation and assessment of risks

Prepare and implement plans

Ongoing evaluation and change of plans

What are budgeting and forecasting?

Budgeting and forecasting are important areas when the company needs to implement strategic plans and plan for future activities. But planning, budgeting and forecasting are often resource-intensive processes with interdependencies where the latest updates are not reflected.

The budgeting process often involves several departments that need to update their business plans – often based on other people’s input – and ensure coherence to other areas, so that the finished budget is coherent and based on the same foundation.

The benefits of a modern solution

Whether the solution should support an annual budget, a rolling forecast, or simply input for future plans in general, a modern solution provides a number of benefits:

Integrated processes – e.g. establishing a link between sales and the financial budget

Use of historical data as a basis and/or distribution key

Workflow overview: Who needs to complete which tasks?

Create a central place for planning initiatives and follow-up

Integration with other IT systems

Combine top-down goals with bottom-up input

Simulation/what-if scenarios – the ability to work with multiple versions also makes it easy to set up several scenarios

Possibility for developing reports in real-time

Budgeting and forecasting are typically based on the finance department’s annual program when schedules and activities are to be determined, and the data basis for these activities depends to a large extent on the other work tasks in the department as well as the ability to be effective with the help of digital solutions.

A budgeting and forecasting solution from twoday kapacity

Our approach to budgeting solutions ensures that we touch all aspects of the budgeting process.

We start by mapping the most important elements of the budget model in an analysis workshop.

We recommend taking the chart of accounts as a starting point, as this is most often central to the solution and links the various budget areas together on operations, balance sheets and cash flow. After this, we can expand the solution to solve specific areas such as salary, IT, and final investment & depreciation, so that balance and the future cash flow can be estimated.

Budgeting and forecasting are not isolated activities

twoday kapacity’s approach ensures a link between financial planning and follow-up. Budget and forecast are updated and approved in the Performance Management solution, but often the approved business plans will be exported to the Business Intelligence solution so that follow-up and deviation analyzes are performed in the existing BI solution.

We are increasingly experiencing companies using statistical algorithms to increase the quality of budgets. Time-based projections can support the development of budgets, and confidence intervals can validate budget inputs and give rise to a qualitative dialogue concerning the level of budget and forecasts.

Most importantly, however, the input from the algorithm is explained and accepted by the business as budget input and not the final budget output. With modern Performance Management, it will be possible to adjust the technical input.

twoday kapacity can help with the following:

Assessment of needs and level of ambition
Evaluation of existing solutions with suggestions for changes and improvements
IT support of the entire planning process
Sparring about organization, roles, and responsibilities
Project management in connection with the implementation of solutions
Guidance in relation to change management and anchoring of the solutions

Do you want to get started? So do we

Do as a large number of the country’s most ambitious companies:
Fill out the form or get in touch with Søren – then we can have a chat about your challenges and dreams.

Søren Toft Joensen

Partner & CCO
stj@kapacity.dk
26 30 90 01