Drastically Simplify Financial Planning: From Weeks of Work to Hours

Guest article by Gianluca Bisceglie, Founder and CEO at Visyond

Financial planning is a necessity and it can be a nightmare. As anyone who's ever played a role in creating a financial plan knows, forecasts can take weeks, even months, of work.

Business leaders, management teams and boards need to have confidence in the accuracy of the forecasts. Forward planning and investment decisions on everything from staffing levels to acquisition and expansion depend on these numbers.

Forecasts shape how companies are perceived. Investors need to have confidence in the projections a company makes. Equally important is the impression that these numbers have on staff, suppliers or creditors, and other stakeholders. 

Despite how important they are, and all the work that goes into creating them, forecasts are never 100% accurate. Forecasts are also far from perfect, even when decisions are made in good faith. Part of the problem is the financial planning process, which is something many companies would benefit from reviewing and overhauling if they want to create more accurate, more robust forecasts.

Financial Planning Challenges

Forecasts are never done in isolation. Numerous stakeholders and managers play a role. Every departmental leader needs to make an input in some way, otherwise how are boards meant to have an accurate picture of the finances of every operational area?

Those with budgetary responsibilities need to outline what they are likely to need in the next financial year. With accurate forecasts, boards and CEOs can set sales targets for the following year. Once a forecast is complete, the figures need to be stress tested, so that a board can have confidence in the financial health of the company.

In theory, this should be an orderly and well-organised process. In practice, those who have been involved in forecasting know how stressful it can be. One of the most difficult aspects is getting input from everyone who has something to contribute. Emails and messages bounce around the company. Meetings are convened, whilst numerous phone calls and conference calls are arranged. Excel based forecasts multiply, with dozens of versions of the master forecast accompanied by numerous other contributing Excel files from various departments and managers. Through one channel or another, information flows into the team creating the forecasts.

Once numbers have been crunched and compiled, these draft figures need to go back out to everyone who contributed. Variations of the forecasts multiply as a result, with many contributors making a personal version of the master Excel file to support their arguments and points of view. All these contributions need to be reconciled before this information can be presented to senior managers or the board. Inevitably more changes are often made after these final numbers have been reviewed, often adding a further few weeks to the overall process.

Alongside the constant risk that someone might share these financially sensitive projections outside of the company - for their own gain or in error - it’s all too easy for mistakes to be made, or figures manipulated. When using Excel, there is no accountability, no way to prevent malicious or accidental sharing, and it’s difficult, if not impossible, to trace who has made changes to cells and formula. Considering the outcome of a forecast and the reliance management places on these projections, it’s a flawed process, and from a security perspective, risky.
  

Is there a better way?

As a process, financial forecasting is time-consuming and stressful. Excel contributes to and compounds these challenges. Thankfully, new software solutions have emerged that are challenging the dominance of Excel and making it easier to create accurate forecasts in a significantly shorter timescale.

Instead of the threat and inconvenience of multiple versions of a forecast flying around, with software such as Visyond you can keep everything in the same spreadsheet. Contributors can upload supporting documents and arguments within cells. Multiple versions of the figures, from everyone who needs to contribute, can sit alongside one another, with secure access and accountability to prevent manipulation or malicious sharing.

Forecasts don’t need to take weeks of work. Preparing them doesn't need to be stressful. And you shouldn’t have to worry about confidential material ending up in the wrong hands.

With the right software, you can speed up the entire process. Instead of spending time worrying about formulas, or working with expert Excel wranglers to stress test the model, your team can focus on ensuring contributions are as accurate as possible while algorithms automatically stress test the models and document the workflow. This way, you can be confident in the figures presented and test new ones in real time if necessary.