Maybe you love it, maybe you hate it—or maybe you don’t know what to feel. Whatever the case, like death and taxes, there’s no avoiding it. Corporate budgeting is a key finance function—and a successful budget helps drive a successful business. But whether your company budgets annually or on a more frequent cycle, there’s no reason to dread budgeting season—not if you have the right process in place. The best corporate budgeting process for your company will depend on your organizational culture—and when it’s aligned closely to strategy it will elevate your budget from “something that needs to get done” to a driving force for your business. In fact, when approached in the right way your budget has the power to bring your organization together, connect dots and eliminate silos—putting finance at the heart of everything your company hopes to achieve. Continue reading to explore different approaches to budgeting and how to make your corporate budgeting process a success. What Is Corporate Budgeting? Your corporate budget is key to enabling your business operations and executing growth. When built around your organizational strategy, it’s the tactical side of your business plan, ensuring resources are allocated in a way that sets your business up to operate effectively, meet its growth goals and keep up with ongoing market demands. To accomplish that, a corporate budget is made up of a series of lower-level budgets—including revenue forecasts, expenditures, working capital, cash-flow forecasts, financing needs, etc.—that all roll up into a single master budget. By aligning the budget to your strategic business plan, you ensure it consistently meets the needs of your organizational objectives. And that moves it away from just the administrative task it’s often been considered to become an integral part of your strategic planning process—and part of the operating plan that will drive your business forward to future success. How Do You Align Your Budget? Ideally, the budgeting process for a company begins with a clear view into strategy and objectives. Without that visibility, it’s tough to ensure your corporate budget meets all of your organization’s needs, with the right resources to facilitate programs, people and initiatives across departments. That’s where budget alignment comes in. Aligning your budget with your business strategy and KPI and goal setting is critical to success—and the more your finance team is involved in your business strategy, the more organic that alignment becomes. But even when finance doesn’t have a seat at the table, the best corporate budgeting process will keep them in the loop on organizational strategy and goals. To accomplish budget alignment follow these three steps:   Step Tactics 1. Keep your eye on the long term Expand the budgeting process past a year using strategic budgeting Break down organizational silos with tools such as scenario modeling or zero-based budgeting, funneling your strategic plan directly into your budget Implement technology solutions that make it easier to visualize your budget over the long-term horizon 2. Get your leaders involved early Whenever possible, get finance involved in building ongoing company strategy and organizational goal setting Use data-driven storytelling to frame your budget within a larger narrative of future company success Make the budget part of senior management’s regular routine—not just a single information dump 3. Measure your success and repeat it Choose the right metrics to track and measure to ensure you’re tying your budget to ongoing performance.  Make tweaks along the way based on your results to course correct for market changes and adjustments to your business goals.  Once you’re achieving budget alignment to strategic goals, consider linking budget performance to individual and team performance as well. Corporate Budgeting Best Practices Aligning your corporate budgeting process with your overall organizational strategy is the first best practice of budgeting. But that’s just the start. There are other ways to also ensure you have a successful budget that empowers business growth and helps your departments meet their individual goals. Consider four best practices for making your corporate budgeting process successful. 1. Connect your data Disparate and disconnected data is one of the top challenges faced by finance teams today—and that can become a very real pain during budgeting season. Data is critical to the budgeting process, allowing you to understand what drives performance, what’s contributing to organizational growth and where you’ve found success before, in order to fuel the current budget, predict its future success and make tweaks based on market and industry conditions along the way. So connecting your data and being able to access clean, current data will in itself build a better corporate budgeting process. 2. Consider the past Traditional budgeting uses your past performance and historical data as a starting point to inform your current budgeting process. Historical data is also critical for predictive budgeting and for understanding what drives your business growth. No matter what budgeting approach you take, though, don’t lose sight of that historic view. Comparing actual performance to past performance will allow you to better predict future performance, just like comparing your rolling plan to your longer-term strategic plan will let you see where you need to make adjustments in order to get to your goals. Model scenarios using that past performance data to understand the potential effects of your budgeting decisions. 3. Understand your critical drivers and KPIs Understanding which factors most contribute to your company’s growth will let you know exactly where to allocate your resources for a better chance of success. It’ll also make it easier to model scenarios to understand how they might affect future performance, so that you know exactly where to focus your budget for the best returns. And remember that non-financial metrics can be just as critical to your organizational performance—and your budget—as financial drivers. Non-financial drivers and KPIs play an important role in helping to keep your budgeting process on track, so always ensure they’re in your line of sight too. 4. Stay agile Finally, having some agility built into your budgeting process will empower you to make tweaks whenever the market or your business requires—ensuring you have the resources available no matter what. Budgets are traditionally inflexible, but finance teams today understand that changes are sometimes necessary—whether that means introducing rolling forecasting or a flexible budgeting process, or using scenario modeling to keep you on top of what’s ahead and letting you course correct your budget when you need to. How Do You Prepare a Master Budget? Your master budget is a sum of all of the parts that make up your business, including the budgets of every individual department and every revenue and spending consideration you’ll need to make. The department, program and line(s)-of-business budgets feed into your master budget to inform how resources are allocated company wide. So how do you do that successfully, so that every element of your business is represented in your consolidated budget? Consider some do’s and don’ts for preparing a successful master budget: Objective 1 Don’t budget in a silo Collaboration is key. For your master budget to be successful it’s going to need input from across the organization—from your department managers to your executive team. You’ll rely on them to provide the information you need to determine the people, programs and initiatives integral to achieving your organization’s goals—and to help you decide where resources should be allocated so that every piece of your business is equipped to contribute to its success. Objective 2 Do have a budget calendar Gathering all of those contributions into a master budget requires a detailed budget calendar that will keep it on schedule. After all, getting to the finish line on time means keeping your process—and all of the people involved in it—on track. Missing something or someone could mean a project, program or team doesn’t end up with the resources they need to make your final goals a reality. Objective 3 Don’t lose sight of the data You’ll need a process by which data is handed off between stakeholders, models to be used by each different part of your organization to ensure everyone contributes their unique information and a method to pull everything together. Objective 4 Do measure and report Use your master budget to measure your company performance and ensure you’re allocating resources in the right way. By comparing budget or forecast data with past performance you’ll better understand whether you’re on track with company goals. Preparing a successful master budget, then, is all about people, processes and tools—as well as the data that underlies all of them. By collaborating across teams, having the right processes in place and using technology to connect data from different formats and across sources, you can create a single version of the truth and ensure a connected, comprehensive budget that takes into consideration every part of the business. Top-Down vs. Bottom-Up Budgeting Will you start your budget from the top-down or take a bottom-up approach? Most types of budgeting fall into one category or the other. Top-down budgeting is a form of budget allocation, beginning with a set amount and allocating resources accordingly across departments. Senior management creates a budget for the business as a whole, allocating resources to each team according to business-wide objectives and targets for the year ahead. They use past performance and existing market conditions to feed the budgeting process—often with some funds set aside to allow for any final shuffles. Bottom-up budgeting starts at the department level. Individual teams prepare budgets based on their needs for the budgeting cycle ahead, with company-wide objectives shared to protect against siloed requests. Departments present their budgets for approval and the budget committee approves or disapproves line items from there. While neither model is inherently better or worse than the other, they each take a different route to budgeting success—and each have their own pros and cons.   Pros Cons Top-Down Budgeting It’s often built around targets based on your company’s long-term plan Executives get involved early—which means their buy-in is built in It can be more difficult to get departmental buy-in It can create an “if you don’t spend it, you lose it” environment Bottom-Up Budgeting It can be more efficient—and accurate— in terms of how resources are allotted It’s more aligned with departmental needs It can lead to over-budgeting It can take longer to complete (unless aided by the right technology) The best approach for you will depend on your organizational culture and whether teams prefer to build their own ideas from the ground up or let leadership guide them. It may even vary from year to year or from budget to budget, depending on the specific goals your business wants to achieve. Finally, some finance teams choose to approach their budgeting from both directions—with a longer-term plan taking a top-down approach, for instance, and short-term budgeting using a bottom-up model. Zero-Based vs. Traditional Budgeting Zero-based budgeting is one example of a bottom-up budgeting process. As a way of ensuring your budget remains aligned with current financial performance and priorities, zero-based budgeting (ZBB) makes “zero” its starting line. While traditional budgets rely on your current year’s budget as a jumping-off point for the new year’s budgeting cycle, ZBB takes a different approach, wiping the slate clean every time. With traditional (or incremental) budgeting, certain expenses are fixed, while deeper analysis is reserved for new expenses. This can help to quickly seed your plan, but also means you potentially miss out on changes to your business operations, as well as possible cost savings and investments that might help your organization evolve. ZBB, on the other hand, can promote transparency and a holistic, organization-wide view, while giving departments an incentive to look for potential cuts. Every expense is connected to ongoing financial performance and company goals, and new and ongoing expenses are examined with the same level of scrutiny to see where funding should go. By starting at nothing every time, ZBB makes sure every expense is connected to ongoing financial performance and aligned with company goals—an approach that can have both advantages and drawbacks. Pros of Zero-Based Budgeting It can lead to significant cost savings, giving you new dollars to invest in other places while improving operational efficiency as a whole. It gives your team true visibility into your organization—allowing you to establish stronger leadership and insights. It can make for better collaboration organization wide, as you determine the programs that should be prioritized and how they’ll work together to contribute to company goals. It can make your company more agile, keeping teams on top of every expenditure and goal—and giving them the insight to pivot quickly when needed. Cons of Zero-Based Budgeting It can be more complex and costly—requiring more time from your team to complete. It can take specialized training or operational acumen to do it right. It requires complete organizational buy-in—otherwise it may put other departments on the defensive as they try to justify their programs and initiatives. Without the right metrics to analyze, it can potentially impact departments that offer less tangible results.   With the right organizational culture in place, zero-based budgeting can help you move your planning process and decision making forward. But of course, zero-based budgeting isn’t the only option—there are several ways to approach your budgeting, depending on your goals. Driver-Based and Predictive Budgeting What drivers are influencing your business? And how will your budget empower your long-term goals? Driver-based budgeting and predictive budgeting take those questions and center your corporate budgeting process around them. In doing so, they can help focus your budgeting on the things that matter most—and allow you to remain sensitive to what’s contributing to your organizational success. Driver-Based Budgeting Every business has its own unique drivers—both internal and external. Traffic, demand, interest rates and even—in some cases—the weather outside, can all help drive the success of your business in any given year. Driver-based budgeting (DBB) takes those critical drivers into consideration, tying the drivers most likely to influence performance directly into the budgeting process. By doing so, DBB gives you long-term visibility into how those drivers affect your company’s strategy and goals, using a rules-based approach to focus your budget around strategic objectives and tell a story as to what contributes to your organization’s performance and how. To accomplish that, DBB looks beyond your line items to the data underneath—identifying what’s driving your performance, good or bad, how those drivers correlate with the resources you’re allotting and who’s accountable for them. That goes beyond financial, taking into consideration non-financial drivers too and incorporating them into your budgeting process. It also includes both internal drivers and those external to your organization. Some examples of internal and external drivers include: Internal Drivers External Drivers Traffic Market size Demand Market changes Market share Competitor market share Number of customers Buying trends Sales volumes Interest rates Sale price Regulatory requirements Unlike traditional budgeting, which starts with a line item and works its way backward, DBB begins with an operational driver and ends with its financial outcomes—allowing you to look at the business activities and resource requirements needed to accomplish those goals and directly allocate towards them. In doing so, it links your budget items directly to the people and resources connected to them. A driver-based process can help you align and focus your budget and provide you with insights that let you make decisions more efficiently and keep your executive team informed. But it can also get complicated the more complex your organization is and the more key drivers you have in play—and may mean a shift of focus for your individual teams. Introducing it successfully takes executive support and a clear line of sight to the data you require. But with those in place, DBB can help you open up visibility into company performance—and help you better understand what it’ll take to keep building towards success. Learn about how to apply driver-based budgeting to your business. Predictive Budgeting Often used as a system of oversight, predictive budgeting relies on predictive analytics to aid the corporate budgeting process and help ensure long-term alignment with strategic goals. It often lives outside of your traditional budgeting process, and is used as a way to check yourself and ensure your budget is on track with organizational objectives. Predictive budgeting lets you create intelligent drivers or ranges of possibilities by drawing on broad sets of data, leveraging statistical algorithms and applying machine learning to look into the future—determining potential short- and long-term outcomes through the application of historical data. In doing so, it allows you to better understand your budget’s potential flaws: where it may not align with your organizational goals, when department managers might have added extra padding into their resource requests or opportunities you might have missed to support your business’s key drivers. Predictive budgeting can also help to: Make cash-flow projections and better understand the cash flow needed in the budgeting cycle ahead. Identify your critical drivers and better understand the business activities you can invest in for your optimum financial outcome. Recognize areas of the business that need attention and identify any holes in your budget that might set your plans up for failure. But as the next frontier in planning, successful predictive budgeting relies on a specialized team member or extra training for your existing team to get right. The right data is also critical—including, ideally, at least a few years of historical data—as well as the technology that will allow you to access that data across disparate data sources and apply modeling and analytics to see what the future holds. With all of that in place, though, predictive budgeting can help you build a better budget and layer data-driven storytelling into your budgeting process. It can also reduce inefficiencies and ensure long-term budget alignment with your strategic goals. Rolling Forecast vs. Static Budgeting Just as important as staying ahead of your budgeting needs is ensuring your budget is keeping up with ongoing performance. Rolling forecasting can help with that. By adding and dropping a week, month or quarter every cycle, a rolling forecast always has a view into the future, letting you look 13 weeks, 12 months, four quarters or 18 months into the future at all times—whatever makes the most sense based on the business process or planning outcome to which it's being applied. In that way it differs from a traditional static budget, which is tied to a fixed timeframe. By working on a moving timeframe, rolling forecasts help maintain visibility into recent performance while better projecting future needs, allowing you to remain agile to new trends and requirements while continuing to move the planning horizon forward. This is specifically useful if you’re at a high-growth company, have to make medium- to long-term commitments like hiring decisions or inventory purchases, or need to keep up with an ever-changing industry. But rolling forecasts can also work alongside more static budgets, incorporating elements of both so that rolling forecasts become an extension of your annual budgeting process. They may be introduced as a process of review at regular intervals to keep up with current performance and changing market conditions—or may be applied only to certain areas, like revenue or cash planning, with a more traditional approach used elsewhere. For your rolling forecasts to be successful, consider these six best practices: Always keep your business-wide objectives front of mind. Align your rolling forecast with your company strategy and iterate your forecast as those goals and plans change. Choose a timeframe that works for your business. Match your timeframe to the rate at which your company is evaluating progress and the pace of the industry around you. Make a choice on how granular you want to get. Focus deeper analysis on the drivers that promise to most impact your strategic goals and ongoing performance. Choose the right technology to facilitate your forecasts. Choose a tool that ensures your forecast has the inputs it needs to be useful across your business strategy and KPIs. Incorporate the best data available. Leverage areas where your data is clean, then use forecasting to build transparency and accountability, for even cleaner data over time. Measure along the way to track execution. Use dashboards and visualizations to track execution so that you can see how your forecast keeps up with ongoing performance. Just remember: however you approach your budgeting process, keeping it aligned to your organization’s culture, strategy and future objectives will be key to its success—and your business’s continual achievement. Now go out and build your organization a better budget!  

All businesses engage in budgeting and forecasting activities to some degree—and if you’re an executive, finance leader or operations professional, improving your budgeting and forecasting processes should always be a top priority. Budgeting and forecasting help you formulate strategies, plan for the future and align your goals across the entire organization. Both processes are crucial components of every company’s growth journey, especially during periods of change. But even though budgeting and forecasting are similar, there are some key differences that set them apart. It’s important for finance leaders to understand these differences so you can prioritize what’s important and allocate your resources accordingly. In some cases, you might even want to assign budgeting and forecasting to separate teams so you can keep a clearer focus on each specific process. So what is budgeting, what is forecasting and why are they both so critical? To appreciate what they are and how they contribute to organizational success, let’s unpack budgeting and forecasting and drill into challenges, best practices and major differences between them. Read on to discover: What Is Budgeting? Budgeting is the process of planning your company’s revenue and expense figures for a specific period of time. It involves identifying available cash flows and allocating financial resources for your company’s required spending.  Here are the primary characteristics of a typical corporate budgeting process: For an annual budget, the process usually takes between three to six months to complete. When finished, the final budget includes detailed financial documents such as the income statement, balance sheet and cash flow statement. The budget provides measurement metrics that management can use to assess financial progress. Employee compensation plans are finalized during the budgeting process. The budget is not normally disclosed to external parties. The Benefits of Budgeting Budgeting allows you to chart your organization’s path and assist your management team with strategic business planning. The process results in a clearly defined plan that’s reflective of your company’s financial and operational goals. Typically prepared annually, budgets provide important guidance regarding what your business can expect to accomplish that year.  Budgeting also has plenty of other benefits, including: The budgeting process forces management to examine your company’s financial activities and assess the viability of each individual expense. Budgeting requires detailed documentation of all the sources and uses of cash, ultimately enabling management to anticipate cash flows with accuracy. Since budgeting often starts from the bottom up, many cross-functional stakeholders are involved in the process. This instills a sense of ownership among employees and motivates them to meet their budgeted goals. You can periodically compare the budget with up-to-date financial results, providing real-time insight into how your company is performing. (A variance analysis of the actual versus budgeted income statement is a good example of this.) Since individual responsibilities and internal hierarchies are often accentuated during budget season, this clarity of roles can promote rapid responses to challenging situations. Budgeting makes it clear exactly where and when financial resources are needed so you can allocate them accordingly and keep the business on track. However, because budgets are prepared so far in advance and based on a fixed set of assumptions, they can quickly become outdated as soon as those assumptions change. This is where forecasting takes over—when budgeting can’t meet certain time-sensitive needs. What is Forecasting? Forecasting is the process of analyzing historical trends in order to predict future business results based on your company’s most up-to-date actuals. Done over a compressed time frame, forecasting typically focuses on major expenses and revenue line items.  Here are the main characteristics of the forecasting process: Forecasting is performed regularly after financial statements are released, usually right after a month-end or quarter-end close cycle. Forecasts generally show summarized projections of revenue and expenses. Key performance metrics are updated based on forecasted numbers, ultimately providing insight into how your business is performing. Publicly traded companies must disclose their high-level forecasts to investors. The Benefits of Forecasting When done efficiently and with reliable data, forecasting gives you the insight you need to reallocate resources proactively and help your managers make data-driven business decisions. There are plenty of other benefits to forecasting, including:  Forecasting reveals business trends that help you determine if you need to adjust course. It’s easier to manage cash flows and capital requirements if you have a well-informed prediction of where future expenses are likely to fluctuate.  You can capitalize on financing and investment opportunities if you present reliable forecasts to your investors. You can draw on your forecasted numbers as the logical starting point for your next budget. Forecasting allows managers to focus their attention where it’s needed, especially in the short term. Budgeting and forecasting are complementary, but they’re definitely not the same. Before we get into best practices and common challenges with budgeting and forecasting, let’s break down the key differences between them. Budgeting vs. Forecasting: Key Differences We already know that budgeting is figuring out how much money your company will need to spend in order to achieve its desired business results. Forecasting, on the other hand, is about proactively analyzing the budget and using both historical and real-time data to predict what those business results will look like. Check out the table below to better understand the key differences between budgeting and forecasting:   Budgeting Forecasting Projected Timeframe: 1–5 years Periodic Forecasts: The rest of the current fiscal year. Rolling Forecasts: Usually the next 5 quarters or more. Average Preparation Time: 3–6 months 1–4 weeks External Disclosure: Not Disclosed Disclosed (at least for public companies) Reliability: Less reliable later in the year when the numbers are outdated. More reliable because they’re based on up-to-date actuals. Best Used For: Formulating high-level strategies and business goals. Targeted decision-making in specific areas. Think of it this way: Your budget is your road map, highlighting key financial checkpoints for every phase of the business journey. But once that journey has started, it’s common for circumstances to change, ultimately outdating the original assumptions that were made when the budget was created. For proactive finance teams, best practices involve regularly reviewing your budget against the changing business environment, forecasting accordingly to determine where the numbers are headed, then adapting your plans as required. How To Build a Budget Budgets should always be as thorough and as detailed as possible. Generally speaking, your budget should include the following information: All planned revenue—including the types of revenue, value and when to expect it. Fixed costs for your business (employee salaries, rent, utilities, insurance, property taxes, etc.) Variable costs (supplies, travel and vehicle expenses, professional services, maintenance, etc.) As you build your company’s budget, it’s crucial that you follow these steps:  Review and understand all the required inputs for your budget (see above.) Analyze previous budgets and other historical data. This will help you determine your expense and revenue expectations for each fiscal month and year.  Consult with cross-functional stakeholders such as sales leaders, budget owners and C-suite executives so you can formulate the plan as a team. Determine if any capital expenditures (equipment, infrastructure, property, etc.) are required during the budgeted period. Prepare financial statements—balance sheet, income statement and cash flow—using your budgeted numbers. Identify KPIs and other performance ratios to see how the budgeted results stack up against previous years or anticipated changes in market conditions. Review the final budget and start looking at opportunities for strategic growth (investment and divestment opportunities, adding or reducing debt/equity, etc.) How To Generate a Forecast As you progress through your budgeted period, you should update your forecasts periodically as soon as your latest actuals are confirmed. This will give you a clearer picture of how your business is performing against your budgeted goals. Here’s how to generate reliable financial forecasts: Identify the key metrics (sales volume, marketing expenses, etc,) you want to focus on with your forecast. Ask yourself: “What am I trying to determine here?” Gather your latest actuals and input them into your forecast template. Determine the time frame for your forecast. (Periodic forecasts typically look ahead to the end of the budgeted period.) Calculate trends based on your historical and year-to-date actuals. Apply those trend calculations to your real-time numbers to come up with forecasted results. If you know of any variables that could skew your forecast (an upcoming influx of cash, merger, geopolitical conditions, etc.) be sure to account for those when you deliver the forecast to your stakeholders. Periodic forecasts are beneficial, but they usually only project out to the end of the current fiscal year. Rolling forecasts, on the other hand, are even more useful because they extend beyond that timeline. Rolling Forecasts Rolling forecasts are generated monthly, quarterly or weekly to help you plan for a defined period that’s beyond the scope of the annual budget—such as the next five quarters, for example. So instead of just projecting out to the end of the fiscal year, most rolling forecasts will predict the next 12 months or more. Once a fiscal month or quarter has been actualized, your forecast just “rolls” over to the next period so you never lose sight of your long-term business trajectory. Rolling forecasts are important for the following reasons: Businesses that prepare continuous rolling forecasts have more reliable information about long-term trends and performance, ultimately allowing you to mitigate risk and plan for the future proactively. Rolling forecasts use real-time data so they stay relevant all the time. You can tweak your forecasts on demand with up-to-the-minute numbers, which is helpful in fast-paced business environments where you might need to pivot on the fly. By projecting out beyond your current year, rolling forecasts ensure your future budgets and strategic plans are as well-informed as possible. Common Challenges With Budgeting and Forecasting Every organization approaches budgeting and forecasting differently, with the complexity and scope of your processes determined by your company’s size, structure and industry. But budgeting and forecasting challenges can persist for any finance team—and the first step toward solving them is recognizing what those challenges are.  Here are some common challenges that might be holding back your budgeting and forecasting efforts: Disparate and Disconnected Data Sources According to the 2020 Vena Industry Benchmark Report, data silos are a challenge for 57% of finance teams. If you’re spending too much time wrangling numbers from your ERP, CRM, HRIS and other data sources, you won’t be able to analyze the story those numbers are telling you. This slows down the budgeting and forecasting cycle and makes it harder to plan proactively when business conditions change. Data silos also make it difficult to collaborate with cross-functional stakeholders, leading to unreliable budgets and forecasts that don’t capture a holistic view of your business. Manual Processes in Excel The 2020 Pulse of Performance Management Survey revealed that 82% of finance teams still use offline Excel spreadsheets for budgeting, forecasting and other core FP&A activities. But the same poll also found that 54% of the Excel faithful aren’t happy with their spreadsheet processes—saying they’re too labour intensive, they take too long to complete and they’re difficult to manage across the entire business. It’s clear that finance teams everywhere are comfortable and familiar with Excel. But once your organization reaches a certain level of maturity, offline spreadsheets won’t have the processing power for advanced budgeting and forecasting. Using Excel alone to manage your budgets and forecasts can lead to version control issues, data integrity problems and formula errors from keying in numbers manually. Ever had a template crash when you’re pushing towards a deadline? (Because that’s what often happens when you treat Excel like a database.)     No Workflows, Audit Trails or Data Validation Measures Budgets and forecasts have a lot of moving parts, which means keeping your contributors aligned is a pretty important job. But if you’re searching your inbox for template files, chasing down colleagues for numbers and constantly losing sleep over whether your data is accurate, it’s tough to keep track of your progress and maintain a healthy work-life balance—especially when you’re spinning over “final” budget version 14.1-a. That’s why you need to have workflows, audit trails and data validation measures in place. Confident budgeting and forecasting is a whole lot harder without them. How A Complete Planning Solution Makes Budgeting and Forecasting Easier According to this report from Deloitte, emerging technologies are reimagining the future of finance—and the teams that don’t embrace this evolution risk falling behind the eight ball. For budgeting and forecasting in particular, a complete planning solution can help you get ahead by making your processes faster, easier and more reliable. Read on to find out how. They Automate Manual Data Entries So You Can Spend More Time on Analysis A complete planning solution leverages both relational and OLAP cube database structures so you can bring all your financial information into one source of truth in the cloud. By integrating directly with your ERP, CRM, HRIS and other source systems, you won’t have to input numbers manually while building budgets or generating forecasts. Instead, the cells in your templates would be mapped right back to your data sources so the values just flow in automatically whenever you need to refresh them.  Here are some other benefits of automated data entries for budgeting and forecasting: You’ll be able to reduce budgeting and forecasting cycle times by up to 50% or more. Your budgets, forecasts and actuals can be viewed from the same template so you can more easily spot variances and identify emerging trends. You can drill down into transaction-level details right from your budget and forecast templates. That way, you always know where your numbers are coming from. With all that time saved, you won’t have to waste days wrangling data for budgets and forecasts. Instead, you’ll be able to focus on what really matters: Planning for the future of your business. They’re Flexible and Easy To Use So You Can Drive Teamwork and Transparency Across Your Business According to the 2020 Pulse of Performance management survey, ease of use is the most important feature for a budgeting and forecasting solution to have. Automations certainly help with usability, but your software still won’t get used if it's clunky and difficult to manage. In order to keep cross-functional stakeholders involved in your budgeting and forecasting processes, you need to choose a solution that’s flexible and accessible for everyone. Here’s how a complete planning solution fits the bill: Some solutions leverage a native Excel interface so you don’t have to abandon your comfort and familiarity with spreadsheets. You can even map your existing Excel templates back to the database, enabling a much smoother transition for you and all your colleagues. Complete planning solutions don't usually require any maintenance or management from your IT department. They are truly “finance owned,” allowing you to organize budgeting and forecasting in a way that makes sense for your business. Cross-functional stakeholders can all work from the same connected template. If somebody needs to change something, audit trails let you track, validate and approve those changes. You can also add commentary so everybody knows what’s going on. They Give You Room to Grow With Scenario Modeling, Dashboards and More If your business is always evolving, your budgets and forecasts are evolving too. However, if you don’t have the ability to level-up your processes as you grow, you’ll have a hard time adapting to the ever-changing needs of your organization.  A complete planning solution makes it easy to facilitate growth with a range of enterprise-grade features that complement budgeting and forecasting, such as: Scenario Modeling: This makes it simple to test your budgets and forecasts against an unlimited range of potential future business scenarios. With more insight into what might happen down the road, your budgets and forecasts will be as well-informed as possible.  Customizable Workflows: Want to add an additional executive review step to your budgeting process? That’s what workflows are for. This feature makes it simple to see exactly who’s doing what as you move through the budgeting and forecasting process. Automated email reminders make sure nothing falls through the cracks. Data Visualization With Dashboards: Let’s face it—graphs are prettier than spreadsheets sometimes. Dashboarding is especially helpful for forecasting because you’ll be able to actually show your stakeholders where your business is headed. Your budgeting and forecasting processes might not require all these features right away, but growing with a complete planning solution makes it easy to leverage them when you need to.

It may not always get the most love, but your cash flow statement is a key part of your reporting story.  Among the main trifecta of financial reports—the balance sheet, income statement and cash flow statement—it’s often the statement of cash flow that gets the least attention and time. But as a view into your company’s liquidity, it provides an important piece of the puzzle. And extracting the information you need begins with putting the right process in place to build the best cash flow statement for your business—in whatever time you have. That starts by choosing between the direct and indirect cash flow methods.  Calculating Cash Flow A mandatory part of your organization’s financial reports, the cash flow statement tracks cash movement for stakeholders of all kinds—including investors and creditors, as well as your own team. It must eventually be reconciled to the bank to make sure you’ve covered all cash transactions. It also provides critical knowledge on how your money is being spent, where it’s coming from and whether there’s enough available to keep up with operating expenses and ongoing debt repayment.  To accomplish all of that, the cash flow statement includes three main components: Investment cash flow: Cash spent on investments your business has made, including equipment purchased.   Financing cash flow: Cash spent and earned on financing activities, such as bonds, stocks and dividend payments. Operating cash flow: Cash spent and earned on operating activities. There may be some disclosure of non-cash activities included as well, but it’s those three components that allow your stakeholders to infer whether your company is paying dividends, paying down their debt or accruing more, investing in capital and so on. Investors or lenders can also identify whether your company’s operating cash flow is smaller than your net income, or whether you’re paying dividends to your investors from your operating cash flow or by accruing more debt. All of which is important if they’re trying to determine the overall health of your business. While financing and investment cash flow are calculated using a standardized approach, methods vary for the third section of your cash flow statement: operating cash flow. There, reporting guidelines require you use one of two methods: direct or indirect. Either is acceptable according to the generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) guidelines, though the direct method is encouraged. Still, each method has its pros and cons. The Direct Method vs. Indirect Method So what’s the difference between direct and indirect? While both are ways of calculating your net cash flow from operating activities, the main distinction is the starting point and types of calculations each uses. The indirect method begins with your net income, while the direct method begins with the cash amounts received and paid out by your business. Each uses a separate set of calculations from there to get to the same finish line, revealing different details along the way.  Let’s look at each in turn: The Indirect Method The indirect cash flow method starts with your organization’s net income, then makes adjustments to get to the cash flow from operating activities. Those adjustments take into consideration things such as depreciation and amortization, changes in inventory, changes in receivables and changes in payables. Once you’re done with the adjustments, you end up with a final closing bank position. The benefit of the indirect method is that it lets you see why your net profit is different from your closing bank position. But because it’s based on adjustments, one of its disadvantages is that it doesn’t provide the same visibility into cash transactions or break down their sources. Without that fine detail, there are insights you may be missing out on. The Direct Method The direct method individually itemizes the cash received from your customers and that paid out for supplies, staff, income tax, etc. Non-cash transactions are ignored, and again a closing bank statement emerges—the same closing bank statement you’d get using the indirect method. An advantage of the direct method is that it gives you more visibility into your cash inflow and outflow—something that can benefit your short-term planning, enabling you to identify and analyze any potential challenges or opportunities that might exist for future cash flow. With a better view of the past, it helps you forecast for the future. But it’s also more time consuming for your team because it requires looking beyond the balance sheet and income statement account activity you already know so well. How To Choose Between Them In the end, if both the indirect and direct cash flow methods get you to the same number, how do you decide which method will work best for you?  Factors like the industry you’re working in and the audience you’re reporting for (whether that be management or banks, auditors or shareholders) will make a difference, as will the data you have available and the insights you hope to generate. But there are a few other factors to consider as well: Ease of use. Since it draws on data you’re already using in your profit and loss (P&L) statement and balance sheet, the indirect method is less complicated for teams to prepare, meaning it offers significant time savings. Transparency and granularity. As it focuses only on cash transactions that have been received or paid out, the direct method offers a more transparent view into your cash flow. It also allows for more specific details rather than using the reverse method of backing out non-cash items. Point of comparison. Unlike the direct method, the indirect method includes your net profit, letting you better compare cash flow with net profit to explain how your business receives cash compared to how it records income. What’s right for your team will be up to you. Most larger companies choose the indirect method, at least in part because of the lower time investment, while analysts often prefer it as well because it lets them see for themselves what adjustments have been made. The direct method, on the other hand, is often the best choice for smaller businesses, as the transparency into operating cash flow details helps them better determine their short-term cash availability planning needs.  What Else You Need To Know No matter which approach you use, your cash flow statement tells a critical part of your financial story and can give you the ultimate flexibility to run your business responsibly. A negative cash flow statement can be a strong indicator that your company’s not in a good position for a potential economic downturn or market shift, or that you need to look into other financing options. It also empowers your investors, creditors and stakeholders with the information they need to understand whether you have the cash available to pay off your loans, if you can pay your employees or how you measure up to your peers.  Whether you choose to use the indirect or direct method will affect the way you operate your cash flow and the story you tell around it. So make sure you choose the method that puts you in the best place to help your business succeed.

Data drives business today. That probably doesn’t come as a surprise for anyone reading this. Over the past decade, more and more organizations have pursued the goal of becoming data driven. Still, many continue to struggle—looking for ways to extract meaningful and actionable insights from the increasing amounts of data that have become available to them. But having a way to connect and visualize data helps achieve meaning from it, making it easier to get to the insights that matter. And that’s where KPI dashboards come in. By activating and automating the right KPI dashboards, you can play an important role in helping your business become more data driven. But building a successful KPI dashboard means understanding your data and the most relevant key performance indicators (KPIs) for your business. Only by focusing on the KPIs that truly matter will you be able to set your organization up for success and turn your data into actionable insights. Thankfully, today’s improved access to operational data means it’s more possible than ever to identify, measure and visualize the leading indicators that truly matter—and build KPI dashboards that turn your data into results. What Is a KPI Dashboard? Dashboards are a powerful data visualization tool used to track metrics and KPIs across your business—from financial and operational metrics to those that look at sales and marketing, HR and customer success. They communicate your performance against your strategies and values and track the ongoing health of your organization, pulling from multiple data sources to offer a single view. In doing so, dashboards help you leverage your data to drive your business forward, facilitate collaboration and transparency and communicate performance to your executive team and organization as a whole. All of that enables you to determine where your organization is and where it might be going, letting you develop useful insights around the metrics that matter. By showing those KPIs in real time, dashboards also let you stay on top of both leading indicators that demonstrate your company’s health and performance, as well as actual results—so that you can course correct as needed when you’re going down the wrong path. But while a large number of companies today use KPI dashboards in some form, creating them is just the start. Whether you get the insights you need will depend on how you’re using them, what they look like and the KPIs you’re choosing to follow. So how do you build a KPI dashboard that successfully helps you move towards your performance goals? You start by choosing the right KPIs. And that begins with data. Assessing Your Data Choosing the right metrics to follow is critical to your dashboard success. Your list of KPIs should be specific to your business goals and objectives and come from conversations with your team and any other stakeholders involved. Ideally, your KPIs will link your organization’s strategy and goals with the people and processes you have in place. The best KPIs will also be built on timely, accessible and accurate data. And with the advent of data technology and analytics, finance teams today can access and measure KPIs in a way they never have before. After all, since you’ll have more access to data, you’ll be able to pick from a better array of KPIs. Modern data science and data warehousing mean more information to work off of and better points of comparison by which to judge performance. Business intelligence and new data strategies also make it possible to dive deeper to get to more attuned insights and to present your results using superior reporting. All of which contribute to better-informed decision making. And if you don’t have the data you need today, there’s no reason to think you won’t have it in the future. Identifying your gaps is still a step forward and a way of building transparency on where your data may be lacking—and where it might be improved with some investment of resources. That’s an important step too, leaving you with more insight into how to create visibility into your blindspots. Defining Your KPIs With so much data available, you may have more KPIs to choose from, but you still only want to focus on those most relevant to your organization. When narrowing down the field and defining your KPIs, consider two questions: What insights will move your business forward? The KPIs that you choose will be the ones you’ll want to measure and learn from—which means you should choose the metrics that will best help your business reach its goals. When identifying your KPIs, consider what you already know (your “known knowns”) and want to dig into further, as well as what you recognize you don’t know (your “known unknowns”) and want to better understand. But keep in mind that the very best KPI dashboards will also offer intelligence and frame your data so that you can ask questions of them and keep your fingers on the pulse, in order to identify your “unknown unknowns”—the things you don’t even know you don’t know—and let you stay proactive. Who should be seeing those insights? Your KPIs will also be tailored to the audience that will use your dashboards—whether that’s your immediate financial team, your executives or some other group. While your KPIs will be unique to your industry and organization, some popular financial and operational KPIs include the following: Popular Financial KPIs Popular Operational KPIs Operating cash flow Units sold/customer count Operating expense New and recurring revenue Current ratio Transactions (quantity, average value, frequency) Net profit margin Product line profitability Net profit or EBITDA Employee satisfaction Working capital Employee turnover Receivables and payables aging Revenue growth Inventory health Sales by region/team member Sales growth Brand exposure/impressions Return on investment Return on ad spend Hone your list so that it’s right for your specific business and audience. You’ll also want to make sure everyone has a clear definition of each KPI and your objective in measuring it. KPI Best Practices When defining your KPIs, there are a few more best practices to keep in mind: Always include a comparison point. You need something you can measure against—whether it’s past performance or something else. If there’s no comparison available, it’s not going to work as a KPI. After all, if you can’t measure it against something, what’s the use of following it in the first place? Have some variety. Try to assemble a mix of strategic and tactical KPIs, operational and financial KPIs and present- and future-facing KPIs—sales orders placed versus pipeline performance, for instance—to help you get a full view of your organizational health and performance. Don’t go overboard. Choosing too many KPIs makes it difficult to keep an eye on any one too closely—making your KPI dashboards less effective. While there’s no “right” number of KPIs to keep up with, between five and 20 is considered the sweet spot by many CFOs. Once you’ve got your list of KPIs, building a dashboard is about telling a data-driven story around them—turning data into insights in a way that’s easy to follow and turn into action. Building Your Dashboards The best dashboards not only talk in a language your target audience understands, but communicate in real time to let you make decisions in the moment. And all of that should be easy to use, engaging and accessible to your stakeholders—because if it’s difficult to access the insights on offer, nobody’s going to bother. So how do you build dashboards that get noticed? Here’s a step by step: Step 1: Gather your data. This will likely involve different data strategies and services to access the sources you need, as well as the implementation of automation tools and working with team members to ensure you’re implementing the right data for your list of KPIs. You may also need to scrub your data to get to what matters so you can build out better data visualizations. Step 2: Map out your data. Understanding how your data feeds into each KPI will be key to understanding whether you have all of the information you need to measure the metrics that matter—and will let you ensure you’re measuring each metric correctly. Step 3: Choose your technology. You’ll want a tool that displays your dashboards in a way that’s visual and dynamic so that you’re engaging even those outside your immediate team. The technology you choose should give you a big picture view of performance, preferably in a single view, while letting you drill down into greater detail to find out more about specific metrics when you choose to and ultimately to easily look at the raw data itself. Step 4: Build your dashboards. With your KPIs defined, the data to support them in place and your technology set, everything is ready to build out your dashboards. When doing so, always keep in mind the goals you hope to achieve and the audience you’re catering to, as well as the information you want to display. While there are commonalities among dashboard styles—a four-quadrant dashboard, for instance, is a popular choice—every dashboard should be unique and designed specifically with those factors in mind. But the work doesn’t stop once your dashboards are built—there’s still more you can do to ensure you’re getting everything you can from them. What Comes Next? Even when your dashboard is done, it’s not really done. To achieve your best results, you’ll want to continue optimizing and improving it, to ensure you’re telling the best possible story and getting to the insights that will actually improve your business. To accomplish this, consider the following: Get feedback. For a dashboard to be successful all your stakeholders need to want to use it. To ensure that’s the case, go straight to the source and ask everyone involved for their feedback—then make tweaks as necessary based on their response. Deploy and distribute. Keep your dashboards visible so that everyone involved has an ongoing view of performance. Whether you email your results in report form, offer direct access to your dashboards or keep them on display in a public place, you’ll want to make sure all of those relevant stakeholders stay in the know. That way everyone will be working towards the same goals—and know where you stand in achieving them. Actually use them. This may seem like a no-brainer, but it’s not unusual for organizations to fall into the trap of creating dashboards but never using them, then wondering why their dashboard efforts proved so ineffective. To see results, you need to integrate your dashboards into the way you work as an organization—bringing them out in meetings, company reviews, etc. The more you’re speaking from a single source of truth, the more value your dashboards will offer. Keep innovating. New machine learning technology and predictive algorithms are introducing fresh opportunities for next-level dashboards that look ahead as well as back, with predictive and prescriptive indicators that promise to give a clearer view into future performance. Technologies like these promise to add new insights to your dashboards and keep you ahead of the crowd—so don’t be afraid to test them out and add new innovations when appropriate, to constantly aim for better results. Finally, as you move forward, keep an eye on the KPIs you’re looking at and always ask yourself whether they’re still the right metrics to tell your story. If they’re no longer effective in helping you meet your goals, it may be time to reevaluate and replace them—and start building new dashboards around your new goals. After all, evaluating your dashboards is just another form of measurement in itself—and part of being a successful data-driven business.

Finance Boring? Never. Is finance exciting? Absolutely, according to Vena’s Chief Financial Officer, Darrell Cox, in his new talk on Plan To Grow, 7 Principles of The Agile CFO. The finance team plays a pivotal role in building out an organization’s growth journey, leading it through change and determining its future success. Sprinkle in some disruption and a dash of uncertainty and it’s pretty obvious that finance leaders are never bored. But what turns a finance professional into an Agile finance leader? The difference between a traditional finance professional and an agile one depends largely on how they view their role and measure their impact. Agile CFOs are trusted business advisors—storytellers who use their finance superpower to bring numbers to life with meaning. They don’t just mitigate risk, they optimize performance. They look forward, not backward. And they harness change to build better businesses. In this on-demand talk, as part of the Transformational Leadership series on Plan To Grow, Darrell outlines the seven principles that guide Agile CFOs: 1. Be Human 2. Be a Storyteller 3. Think Big 4. Think Forward 5. Embrace and Own Change 6. Have a Bias to Action 7. Embrace Technology 

Going beyond the numbers to shape a powerful narrative with your data is an important skill for finance leaders to master.   If you start thinking about the world’s best storytellers, you’ll probably lean towards the Shakespeares, Spielbergs and Springsteens of the world. But what about Agile CFOs? They’re pretty savvy storytellers too. When it comes to running a business, strategic decisions are always driven by data. And as every organization’s data analytics maestro, it’s the CFO’s job to uncover the story behind that data. Agile CFOs, though, take this a few steps further: They’re constantly challenging business plans, leading through change with confidence, fostering company-wide teamwork and telling the story beyond the bottom line. Agile CFOs enable timely, data-driven business planning with the right tools for the job. They’re the driving force behind the company’s plan to grow. Looking for more Agile CFO insights? Check out PlanToGrow.com and watch the free, on-demand talk, “7 Principles of the Agile CFO.” Consolidating your financials and reporting the numbers is one thing, but shaping a powerful narrative to drive informed decision making across the business is another. Agile CFOs don’t just deliver the what, they also deliver the why behind every number and every business plan. It’s called data storytelling—and it’s a skill every finance leader should practice. In this blog post, you will learn: What data storytelling in finance looks like Why data storytelling is important for finance leaders How to master data storytelling for finance-led business planning What Is Data Storytelling? Data storytelling is a creative way of consolidating, analyzing and presenting important data in a format that’s easy to understand. In finance, data storytelling complements FP&A processes, such as budgeting, forecasting and financial reporting, by providing legitimate context and reasoning behind the reported figures. It helps CFOs turn numbers into narratives with input from every arm of the company, ultimately resulting in a more strategic, reliable and well-informed business planning process. Why Is Data Storytelling So Important? Data storytelling is crucial because it helps you make a business case for financial decisions. It also allows you to contextualize and justify financial results. When a company needs to take a necessary action, data storytelling is how Agile CFOs identify, plan for and communicate the path forward to the rest of the company. Let’s say, for example, that you need to implement a hiring freeze in a recession or make a substantial investment in product development to compete with larger competitors. Data storytelling allows you to clearly communicate the projected result of that decision—both financial and non-financial—and align stakeholders across the company on business objectives moving forward. Another example could be if your business overspent on sales and marketing. Data storytelling is how you articulate: Were our quotas too low? Is our advertising budget too high? What really happened here and how can we fix it? Data storytelling puts it all into perspective and that’s why it’s so important for successful finance-led business planning. Top 3 Data Storytelling Best Practices With business conditions evolving as rapidly as they are these days, planning for the future of your company means having to make a lot of quick decisions. Now more than ever, you need to know how the choices you make today will influence the bottom line tomorrow. It makes insightful data storytelling an even bigger priority, which is why Agile CFOs use integrated planning tools to do it well. Make sure you follow these three best practices so you can master data storytelling at your organization: 1. Visualize Your Data With Business Intelligence Dashboards Many people are visual learners by nature and that’s why dashboards are such an essential aspect of data storytelling. When configured properly, dashboards can be used to visualize a range of metrics and KPIs from across your business. They can include graphs, charts and scorecards that bring your financial and non-financial data to life. Given how simple they typically are to read, dashboards make it easy to align your numbers with compelling narratives. A recent survey from BPM Partners suggests they’re growing in popularity too, and for good reason. Well-built dashboards allow you to: Measure real-time performance trends and identify opportunities for improvement Benchmark important KPIs and track results against those benchmarks over time Identify relationships between metrics and report what those mean for your business Provide key stakeholders with a visual guide to their reported numbers Ensure transparency, accountability and engagement across the organization by showing employees how their efforts are moving the needle Every company’s business intelligence strategy is different, and there’s no one right or wrong way to set up your dashboards. It all depends on the story you’re trying to tell, so make sure you build the dashboards you need to tell that story effectively. Check out this dashboarding guide to learn more about how to tell powerful stories with your numbers and guide your business forward with confidence. 2. Eliminate Data Silos So You Can Tell the Whole Story Data storytelling in finance is about more than just revenue and profit margins. In order to tell a complete story with your numbers and convey their impact on the entire business, you need to weave cross-functional operations data into the narratives you build as well. Consider this example: Your company is preparing to launch a new flagship product offering. You’re adjusting your budgets and forecasts and planning for some additional revenue. In addition to the bottom-line projections, the story you tell in your management reporting or your board meeting should answer the following questions: How will this affect headcount? Will we need to hire more staff to accommodate higher revenue targets? If the product launch doesn’t generate as much interest as we expect it to, do we still have enough active deals in our sales pipeline to meet our goals? Is our infrastructure equipped for a more rigorous production schedule? Will we need to invest in a new facility? The answers to those questions shape the narrative you’re trying to develop here, but the specific data you need might not be easily accessible. If critical data is siloed in multiple disparate source systems—such as your ERP/GL, CRM, HRIS and fixed asset tracking system—you’ll have to hunt down numbers manually which is tedious and prone to error. It makes agile, data-driven storytelling a lot more difficult to do. That’s where integrated planning tools come in. With one centralized platform that connects your existing data sources, you can eliminate data silos and build a single source of truth your entire company can trust. Not only will you save time, but your cross-functional stakeholders will also find it easier to participate in the strategic planning process—ultimately resulting in more reliable business narratives that tell the entire story. Discover how to integrate your data sources for faster, smarter and more efficient data storytelling from a single source of truth. 3. Know Your Audience & Inspire Them To Take Action “People hear statistics, but they feel stories.” Those are some wise words from Brent Dykes, a frequent Forbes contributor and author of Effective Data Storytelling. The statement addresses exactly why data storytelling is so powerful: It evokes emotion, inspires action and drives positive outcomes for your business. It’s about rallying your colleagues and planning as a team after drawing them in with a story. After all, people tend to perform better if they know their role in your company’s narrative and can feel the impact of their contributions. That’s why you need to shape stories that appeal to the audience you’re trying to engage. Not everybody is motivated by numbers alone, and Agile CFOs understand this better than anyone. Let’s say, for example, that you’re reporting on a major loss that wasn’t in your quarterly plan. You can’t just send around the same spreadsheet and simply say, “there are the results.” If you want to inspire action, you’ll have to tailor the story purposefully so every department understands how to respond. Sales leaders in this case might need a forecast update so they can realign targets with their team. Operations teams might want a detailed breakdown of transactional data to ensure that nothing was overlooked. Investors will want to know if your three-year plan is affected, and HR leaders will want a heads up if they need to prepare for layoffs. Now, instead of just reporting the numbers, you’re shaping an actionable narrative driven by legitimate financial data. And like any good story, it’s all about the delivery—you need to be clear, assertive and personable so your message doesn’t get lost in the fold. As you continue to tell stories with your data and plan for today and tomorrow, ask yourself: What am I trying to achieve with this narrative? What action do I want to drive? How can I tell this story in an empathetic way that resonates with my stakeholders? What’s important to my audience and how does this story address that? By answering those questions daily and following the best practices above, you’ll master data storytelling and be able to better support agile, finance-led business planning. And with the right tools at your disposal, including dashboards and integrated planning solutions, uncovering the narrative behind your numbers will be a breeze. Data-driven storytelling will grow into a standard process for your finance team as you continue to navigate change and plan for the future of your business. Learn more about how you can quickly get started with data storytelling, or talk to a Vena FP&A expert 1:1 to help you plan for today and tomorrow.

If a literary author sees the value in using Excel to keep track of more than 150 characters, just imagine what CFOs and their teams could do. The story of how a U.S. president coped with the sudden death of his son, Lincoln On The Bardo may not be the kind of escapist reading that CFOs and other business leaders would turn to in their downtime. You don’t have to love George Saunders’ novel, however, to appreciate the process he took to create it. Based on true events in the life of the late Abraham Lincoln, Saunders’ book has been receiving major accolades for its engaging storyline and believable characters. Most of us would probably find creating this kind of serious literature a little intimidating — which makes it a comfort to know he turned to the finance professionals’ most valuable tools when he wrote it:  Of the 166 different voices in the book (he knows the exact number; “I made a spreadsheet”), not all are fictional. “I thought, to do ghosts all the time was not going to work,” Saunders remembered. “It’s almost like there’s too much control in the writer’s hand, since the ghosts can do anything.” In a certain way, there are actually some similarities between the way an author like Saunders works and how performance management software is changing the way companies operate. The work of any novelist is grounded in some kind of essential, single version of the truth. Exactly how factual and well-researched that truth is depends on the writer, of course. An even bigger portion of the novelist’s task is to imagine possibilities and let them play out on the page. The Task For CFOs Now think about the way companies use data — the kind of information that was once locked in spreadsheets but can now take on a new life by (for example) connecting them to a central database and automating the data collection process. The task for the CFO (and his or her team) is to then imagine possibilities based on what the data tells them and let them play out on the page. Or in the board meeting. In both cases, spreadsheets are a highly effective way to organize information so that the creative, imaginative work can happen more readily. This is where you and your team should be spending your time – not copying and pasting numbers from cell to cell. A recent article on Adweek, for instance, explored how ad agencies are starting to make use of artificial intelligence (AI). One of those interviews suggested that job security will depend on embracing machine learning and leaving the past behind. “If your job is really to move numbers around a spreadsheet and optimizing it based on what’s performing, the computer is going to be way better than you and faster,” the article said. Too often we forget or overlook that spreadsheets are not just places to move numbers around but to move knowledge forward. Excel may always be more of a mainstay among enterprise finance departments than novelists, but there’s no end to the novel ways you can use them to your advantage. The post A Novel Use of Excel Spreadsheets to Inspire Finance Departments appeared first on Blog | Vena Voice | Vena Solutions.