5 ways Cloud-based FP&A software can improve budget and forecasting processes
For an organization to accurately budget and forecast, they need control of their financial data and to understand the ripple effects that financial decisions will have across an organization.
Integrated and Cloud-based financial planning and analysis software (FP&A) can provide financial professionals with 360-degree insight to understand how budgets, forecasts, and general financial decisions affect an organization’s bottom line.
Keep reading to learn how a Cloud-based FP&A solution can help optimize the budgeting and forecasting processes of your financial function with a single source of data truth.
How do budgeting and forecasting interact in financial operations?
Simply, a budget is a representation of an organization’s current financial situation based on the balance of income and expenses, with reference to planned available funds.
Forecasting utilizes the current and historical budget to predict what future financial scenarios could look like, as well as how economic trends may affect future financial conditions.
It should be clear that these two processes have a symbiotic relationship where they inform each other. Both budgets and forecasts require integrated data to be accurate and represent the truth of finances.
Why can’t legacy systems effectively plan and analyze finances?
Many FP&A teams still use legacy systems such as Excel to budget and forecast. There are many issues this presents to the accuracy of these reporting processes.
Excel can’t be updated in near real-time; this presents an issue when multiple accounting professionals are creating a budget.
These professionals constantly have to create multiple versions of the same spreadsheet and rely on succinct peer-to-peer sharing to ensure the spreadsheet is accurate. Yet, this is rarely the case.
Data can be lost as a result of peer-to-peer sharing and lead to budgets that aren’t holistic or accurate. When budgets are missing information, this will have a knock-on effect on forecasts and will, overall, lead to financial decisions that are misled by inaccurate data.
The benefits of budgeting management software
Cloud-based FP&A software not only makes the process of creating budgets and forecasting easier and more succinct but also ensures the accuracy of data. With a single source of data truth, financial teams can gain unrivaled visibility across their finances.
Below we have listed the main benefits that Cloud-based FP&A software can bring to budgeting and forecasting processes:
1. Improved Accuracy
As mentioned, legacy systems present an issue in that data can be lost in version history.
On the Cloud, multiple accounting professionals can access and work on the same document simultaneously in real-time. This ensures that no data is lost in the peer-to-peer sharing process as it is continuously updated within the Cloud.
Moreover, Cloud-based FP&A software is integrated with the data of other key business functions. This ensures there are no oversights in data representation; financial teams gain visibility across not just financial data but also HR data and more, ensuring that all data is considered.
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2. Optimized productivity
The time taken up by manual data entry can lead to a loss of productivity and FTE hours being used inefficiently.
Budgets and forecasts require large multiple data sets to be consolidated, and this takes time to do manually. Moreover, this eats into the time that accounting professionals need to spend on data analysis to create budgets and forecasts.
The time financial professionals gain can be better spent on data analysis so that forecasting and budgeting are considered, informed, and comprehensive.
3. Advanced Reporting
Similarly, when data is consolidated in the Cloud, finance professionals can easily gather relevant data related to a report. Business functions can use the FP&A software to generate holistic reports, taking multiple datasets into account, in mere seconds.
These reports usually take a long time to generate but are vital for budgeting and forecasting. Thanks to automation with FP&A software, they can lead to speedy but accurate decision-making.
When a budget is created, this can then be generated in other reports to help other business functions make better financial decisions and forecasts as well. Put simply, advanced reporting capabilities allow budgets and forecasts to have a higher utility across a business.
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4. Scenario management
Scenario management isn’t synonymous with forecasting but is an advanced function of forecasting. When we can forecast data alongside the creation of accurate budgets, we can use both datasets to simulate what might occur in certain scenarios.
By understanding how finances may react to certain scenarios, an organization can build resilience against potential disruption and remain better prepared when the unpredictable occurs.
This isn’t just a simulation but can help us make better decisions today based on the results of scenario management and even build plans of action when, and if, certain scenarios occur.
5. Improved decision making
Financial decisions are arguably some of the most important, but even having succinct budgeting and forecasting processes can also enable better decision-making within other functions.
It comes as no surprise that those who are more in control of their data and budgets and can effectively forecast will make informed decisions. Moreover, when the data presented to teams is integrated and holistic, decision-makers can consider how their decisions could affect other areas of the business, rather than just finance.
How can Unit4 FP&A improve your budgeting and forecasting processes?
With the right technology supporting you, your organization can manage revenues and expenses accurately, with the ability to forecast, thanks to Unit4’s Cloud-based FP&A solution that integrates with other business functions to give you a single source of data truth.
Our people-centric, project-focused solutions are purpose-built. Organizations can manage financial operations optimally with industry-leading software for Financial Planning and Analysis (FP&A), Enterprise Resource Planning (ERP), and Human Capital Management (HCM). To learn more, talk to sales today.
