The end of one year and the beginning of another is a happy time for most of us. But for those of you who work in finance, the cheer is dampened by some predictable end-of-year pains, resulting in finance headaches. Tasks like closing the books on the year just passed and finalizing plans and budgets for the year to come make this period probably the least favorite on your finance team’s calendar.
Granted, there are interesting questions to answer about whether performance matched plan and what’s responsible for variances. But the year-end process also involves lots of laborious detail work to confirm that all the numbers are in and that everything ties out correctly.
Before considering ways to improve the process, let’s take a look at some end-of-year aches and pains common to many finance organizations. See if these sound familiar.
- Too much time is spent collecting and verifying numbers. It’s not unusual for finance teams to spend 60-70 percent of their time tracking down figures in disparate, disconnected data sources. A necessary evil perhaps, but not the best use of time for trained professionals.
- Budgeting buy-in is hard to come by. Budgeting is one of the least popular activities in the office of finance—and in most other offices as well. Static annual budgets are at the root of much of the dislike of budgeting. Plus, the process of creating them is time-consuming and fraught with politics. Worst of all, budgets are often obsolete by the time they see the light of day.
- Spreadsheet errors cause distrust of budget numbers. We all want the proverbial “single version of the truth.” But spreadsheets are notoriously prone to error, and even experienced power users aren’t immune. Research shows that most spreadsheet errors aren’t due to carelessness. They’re simply a fact of life with any manual activity, like cutting, pasting and keying in hundreds of numbers. 1
- It’s difficult to determine what really drives P&L. Revenue, profit, cost and cash flow numbers all tell how the business is doing. But they don’t tell the whole story. Non-financial data can be just as important, but it rarely gets the attention it deserves.
Heading off next year’s finance headaches
What to do? Analysts and consultants have been studying the finance function for years. And leading companies have shown that the right solutions and business practices can make the finance professional’s job more efficient and a lot less headache inducing.
Here are some changes to consider that could make your process for next year go a lot more smoothly than it did this year:
- Automate key repeatable processes for collecting and verifying data. Automation is easier than emailing spreadsheets back and forth. It can speed up the process dramatically. Most important, automation frees up you and your team to perform value-added analysis.
- Reduce spreadsheets. Eliminate spreadsheets where you can but keep the familiar Microsoft Excel interface where possible. (In other words, don’t throw the baby out with the bathwater.) A solution that lets you retain the Excel interface takes advantage of your team’s existing skill set, speeds adoption and increases the ROI on a planning solution.
- Institute continuous planning. Organizations that have made the switch to continuous planning and rolling forecasts see noticeable improvements in their ability to forecast quickly and accurately.
- Include more operational data—and operational people—in your budgeting process. People will agree on a budget more readily when they had a hand in creating it. That’s just human nature. But budgets are also more realistic when they include input from the front lines of the business. Collaboration is especially beneficial when people can contribute using the business terms they use every day— resources consumed, hours worked, units produced. The result is a more realistic budget that’s accepted by all the participants.
- Move to the cloud. More and more businesses are moving functions to the cloud—and with good reason. Cloud solutions require less up front cost and less of a time commitment from your IT department. Cloud-based solutions also help deliver the agility that every organization prizes so highly today.
Time to survey the solutions
So, while the year-end pains are fresh in your mind, now is a good time to think about implementing the financial planning and analysis solutions and practices that can make next year’s process go better. How much better? Well, a recent story in CFO magazine—noting how new tools have lessened the drudgery of planning—was titled “Let the Fun Begin.” 2 After all, there’s nothing wrong with work being fun too. In fact, you may have some fun trying out IBM’s planning solution for yourself in our free trial.
Take a look today. In the meantime, may all of your finance headaches be metaphorical rather than physical.
1 Professor Raymond R. Panko, University of Hawaii Shilder College of Business, “What We Know About Spreadsheet Errors,” Journal of End User Computing Volume 10, No 2. Spring 1998, Revised May 2008 http://panko.shidler.hawaii.edu/ssr/Mypapers/whatknow.htm
2 Keith Button, “Let the Fun Begin,” CFO, November 2017