Centage Blog

A New Way to Look at Accounting Data

How a software solution changed the way I look at financial data.

I usually don’t rush out to purchase the latest and greatest technology products; I hardly ever jump on every software or hardware upgrade that becomes available. I just seem to be happy with the software tools I use in my everyday work, as long as I’m not too far behind.

As a long time user of the Budget Maestro software application for small and medium size enterprise budgeting and forecasting, I was quite content with the reporting capabilities of the software and the fact that I was able to quickly, as soon as the actual accounting data was available after period end close, analyze budget data against the actual results.

This analysis can be done within minutes of importing trial balance data into Budget Maestro.  If the General Ledger used is one that is directly supported by Link Maestro, another Centage Corporation software product, data is immediately available in the Budget Maestro software to analyze. This arrangement seemed to do the job.

Then, years later, I heard about a new Budget Maestro companion product, Analytics Maestro, which seamlessly connects to any Budget Maestro plan (or any of its versions and actual data).  For reasons that I just can’t explain, I did not jump on the opportunity to investigate this product until recently, when I acquired a license to this product.  This followed a webinar I attended on this product, and half way into the demonstration I knew I had to have it.

In my blog entry titled “Two Key Principles in the Budgeting Process” I mention two fundamental principles that each budget process should encompass. One of them is timely and periodically analyzing actual data against budget data. This activity cannot be stressed strongly enough. No intelligent and informed decisions can be made without reliable data that can be easily seen and understood. My only regret here is that I did not acquire Analytics Maestro sooner.

Assuming you have the ability to perform this analysis on a regular basis and without too much effort and that the budget data can be relied on, can you really see and understand the results of the analysis if you just compare numbers?  What if you had a complex organization with many business units and multiple product lines, customer classes, sales regions, expense categories and other business “dimensions”? That can make the analysis much more complicated because you have to be able to slice through the data’s “dimensions” and look at the data from multiple viewpoints.

This is exactly what Analytics Maestro is able to successfully address. It lets you see and understand your data like never before. This is what got me so excited about this product and it is why I now regularly use it and share my experience with it with people I know who daily face these challenges.

Analytics Maestro is an MS-Excel add-in product. It connects to user created Budget Maestro data cubes, the storage units that hold all the Budget Maestro plan data, including all versions, as well as actual accounting data captured by Budget Maestro from the company’s accounting General Ledger.

Excel is used because of its great formatting capabilities and the presentation graphics it affords.  Just like in Budget Maestro, there are no formulas or programming needed, only formatting, assigning color and graphics to make your presentation stand out, and your data easily understood.

However, there is one more great capability here: The budget and actual data are used by Analytics Maestro exactly the way you set up your organization structure (e.g., business units, reporting entities), data groups (holding data dimensions unique to your organization, like customer classes, product lines, geographic locations, etc.), chart of accounts structure and other dimensions.

The chart of accounts you use in your actual accounting system is mirrored in Budget Maestro, which makes it an extension of the actual accounting into future periods.  As budget items are assigned to their appropriate G/L accounts in the software, Budget Maestro automatically generates all the standard financial statements and other reports.  All that data is transferred to the data cube Analytics Maestro is accessing to create its presentation reports.

What this means is that any format of any report you choose is available in Analytics Maestro, including consolidated financial statements (e.g., Income Statement, Balance Sheet and Statement of Cash Flows).

When in Analytics Maestro, all you have to do is select the component you want to look at and as soon as you double click on its title, only the relevant data appears, while all graphs and charts, tables and other presentation data instantly change to reflect your selection.  Each selection displays only the relevant data, allowing you to slice and dice through it like never before.

A quick demonstration of this product was all it took for me to be hooked.  I knew right there and then that I had to have this product. My experience so far fully confirms that.

For many years I’ve been preaching that unless a company can see and understand its data, any decisions made by management can be risky and ultimately costly.  It really comes down to the difference between failure and success.

Analytics Maestro (combined with Budget Maestro) is a product that can make that difference.

Tags: analysis, budget maestro, budget software, budgeting, budgeting and forecasting software, budgeting and planning, budgeting software, business budgeting software, cash flow, cash flow analysis, cash flow budgeting, cash flow reporting, financial planning software, forecasting, payroll planning, personnel planning, quickbooks, scenario planning, spreadsheets, variance analysis, what-if analysis, what-if scenario, workforce planning Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Think you can rely on spreadsheets for financial applications?

Think again. They probably are not as complete, reliable and accurate as they appear to be.

Earlier this summer I was on an internal control engagement at a local publically held company that must annually comply with the Sarbanes Oxley act concerning internal control over financial reporting, management disclosure and attestation by an external auditor. This process recurs every year and following the audit the external auditor gives an opinion before the company can file its annual report (FORM 10-K).

Since this was not my first year on this engagement I knew the company had certain deficiencies with IT change management and with end user computing controls. These are usually internal controls over the design, implementation and use of end-user programmed databases and spreadsheets used in financial and accounting processes that affect external financial reporting, and the control environment over changes made to these databases and spreadsheets.

As is the case with many companies, this organization had an infinite number (so it seemed) of Excel spreadsheets that were designed and maintained by many employees, practically in every department of the company.

For the purpose of my engagement I was only interested in spreadsheets used to compile and consolidate financial information that was used in the preparation of external financial statements.  I identified several of these spreadsheets; some were very complex where data from many sources were consolidated into a set of reports.  These spreadsheets also included inter-company eliminations and other formulas, functions plus macros and VBA code.

As is required in this type of engagement, all deficiencies were reported to the company management and it was up to them whether or not to further disclose them in the filing.  The external auditor’s job was to audit the control framework both for design and effectiveness of controls and form their own opinion, requiring management to disclose certain material weaknesses, defined as severe deficiencies, or a combination of deficiencies aggregated to a material weakness.

It is common with spreadsheets used in accounting, finance and reporting to have little or no internal control over critical spreadsheets which implies that:

1)   There may be undetected errors and omissions in one or more of the worksheets included in one or more workbooks.

2)   There may be undetected erroneous or broken links among the many worksheets (tabs within one workbook), or workbooks (separate Excel files).

3)   Formula and function cells and other critical areas of spreadsheets may be at risk of being unprotected from accidental erasure of data, tampering with formulas and links, etc.

4)   Changes to cells, formulas, functions, links, macros and other VBA code usually performed by the original authors of these spreadsheets may introduce new or additional errors to these spreadsheets.

What this implies is that financial statements compiled with the use of Excel spreadsheets may be flawed due to undetected errors.  I recently wrote about this topic in an article published in Accounting Today.

These are the financial statements that are filed with the SEC (by publically held companies), and / or given to shareholders, bankers and other persons on a periodic basis.  Unless the errors are detected either by internal audit or by the external auditors, misstatements will occur and may not be detected for a long time. Restatements of financial statements are often the result of detection of erroneous financial statements.

Use of spreadsheets to compile financial statements without a solid internal control framework and change management is a bad idea. So is use of spreadsheets in other important financial processes, such as corporate planning and budgeting.

Fortunately, similar to certain ERP solutions where consolidated financial statements can be produced without use of spreadsheets (requiring specific setup which many companies simply prefer to ignore), there are planning and budgeting applications that do not rely on spreadsheets. These are always preferred to the use of spreadsheets.

Unfortunately, among these “purpose built” financial applications and primarily planning and budgeting applications, many still rely on user supplied formulas, links and other programming, which in addition to significant amounts of time and effort to design, implement and maintain, always pose risks of errors and omissions and ideally require an mature internal control environment over these processes, rarely seen in most industries.

This leaves us with only one sensible option:  Implementing financial applications that are not only removed from the spreadsheet environment but also do not require user-designed formulas, functions, links or other programming code.  I see this as an emerging product category in the years to come, with anticipated positive acceptance by finance managements of many organizations.

Tags: analysis, budget maestro, budget software, budgeting, budgeting and forecasting software, budgeting and planning, budgeting software, business budgeting software, cash flow, cash flow analysis, cash flow budgeting, cash flow reporting, financial planning software, forecasting, payroll planning, personnel planning, quickbooks, scenario planning, spreadsheets, variance analysis, what-if analysis, what-if scenario, workforce planning Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The Power of Financial Dashboard Reporting

Often, companies seek out help because they are either in the process of implementing their first financial dashboard and would like advice on the process or because their dashboard is not working to the level they need it to. In some cases this comes down to having never used a financial dashboard due to its relatively recent addition to the business world, but in other cases this is because many companies are still quietly hesitant about the entire process.

Many senior managers have been working since the 70s and 80s, when finance was handled with ticker tape and line after line of grinding out the numbers. Even those who worked in the highest tech companies often started working with spreadsheets and have continued to do so for their entire careers. Switching to a financial dashboard, where there may be a large number of options for the UI and no formulas that can obviously be adjusted can feel bare, or worse it can even seem incomplete. The shift from a medium that involves long, hard hours to a new format that can provide you with massive amounts of information distilled into a few select data points is as much a mental and emotional shift as a physical shift in how your company is run.

Selecting Your KPI

One of the fundamental problems with using spreadsheets is that it allows you to get lost in the numbers. While this can be psychologically comforting, as this has been the state of so many businesses for so many years, this comfort can be a trap. With a financial dashboard, you have the power to select a massive number of different KPI variables that can come from an almost unlimited number of data sources around the world. The largest challenge for many CFOs is to accept that their direct input and “number crunching” is no longer necessary, as the numbers are processed in the cloud.

However, there is another challenge that can be just as daunting. This involves determining whether the key performance indicators you used to consider most important when you used spreadsheets are actually the most important ones now that a financial dashboard is available. This is where your judgment as a finance professional comes into play, as well as where you may end up having to defend your decision to the CEO and the Board. You may even find that your initial changes may not be for the best under conditions you may not have been able to identify before.

Modify KPI Variables Within the Financial Dashboard

You have two primary concerns when you are adjusting which performance metrics are your KPI: the purely financial and the psychological. When it comes to finance, this is your company and your domain. Often your decisions will be based around telling the story of your company in a way that is both pleasant and legally compliant. This has less to do with finance itself and far more to do with psychology. Presenting your company’s numbers to the CEO and the Board of Directors may be more effective by selecting equally accurate but more positively-influencing variables.

Consolidate Your Data

Data consolidation is among the most important parts of using a financial dashboard. The sources of data and potentially thousands of spreadsheets from across the company that many businesses use to inform their numbers can quickly become unwieldy, even in the hands of dedicated professionals. The consolidation that happens within the dashboard allows you to easily read the results of numbers from across the company without having to rely on any formulas, giving you more time to focus on the financial health of the company.

Use Your Time Most Efficiently

As an executive, every moment of your time is precious. Traditionally, the model was to work harder and longer hours if the numbers did not immediately tell the story and provide all of the information you needed, but there simply are not enough hours in the day to do that with today’s businesses. The complexity is too great, and there are too many important decisions to make to become bogged down in documenting the details instead of acting on them. The documentation can be handled easily by your financial dashboard with nearly zero use of your time and with absolutely no “busy work” on your part in reviewing the vital numbers. For more information about how financial dashboard’s work, take a tour of Analytics Maestro.

Tags: analysis, budget maestro, budget software, budgeting, budgeting and forecasting software, budgeting and planning, budgeting software, business budgeting software, cash flow, cash flow analysis, cash flow budgeting, cash flow reporting, financial planning software, forecasting, payroll planning, personnel planning, quickbooks, scenario planning, spreadsheets, variance analysis, what-if analysis, what-if scenario, workforce planning Tagged , , , , , , , , , , , , , , , , , ,

Are you Comfortable with Your Existing Budget Process?

Why it may be worthwhile to rethink the budget process and look for changes

From time to time I realize that certain tasks I perform, mostly personal and some professional, are harder to do and take longer than they should. It is, however, comforting to know that these familiar tasks will get done, albeit not in the most efficient and cost effective way. My logic is that next time, before I have to start working on one of these tasks again, I will first try to find a better solution. This seldom happens, although I’ve gotten better at it over the years.

Several years ago I was visiting a client, a mid-market direct marketing company on an internal control audit engagement. I noticed that the finance group employed three full time budget analysts and a budget manager. These four people dedicated almost 100% of their time to the budget preparation, consolidation and periodic maintenance. Their data for input was received from many department managers representing business units, divisions and locations.

Several other persons in the finance group also participated in the budget process, mostly during the review and approval phases. The finance VP was the process owner and the entire organization used Excel spreadsheets to compile the budget.  There were hundreds of them, many linked together and miraculously consolidating everything into a set of worksheets that once printed and bound became the official corporate budget.

When I interviewed the Finance VP about his internal controls I asked him how comfortable he was with the budget process, its accuracy and amount of time and effort it took to complete it. His reply was: “I’m not sure how accurate it is; I know there are errors in formulas and links and it is very hard to update, but this is what we have and we know the process well. It was designed years ago and we don’t feel we have the capacity right now to completely troubleshoot these Excel workbooks, or change the process”.

Coming from a finance department person, I was not surprised with his answer. It often seems easier and simpler to work harder and longer instead of taking the initiative and changing the way we do things by replacing the tools we use and the processes we employ.

You often hear that costs of new IT systems, software and other tools are what prevent organizations from optimizing their processes, achieve higher efficiencies, etc., while at the same time, the reality is that not incurring these costs and putting off making the additional effort to design an improved process is often much more expensive (especially long term) than the cost of the proposed process change.

To use this budget process as an example, most finance managers know that using spreadsheets is not the right way, which is why there are specific software solutions designed to remove spreadsheets from the process. Yet they continue to do it the hard way, while their organizations do not get the benefit from using available new technology.

As often is the case, change must be instilled by management with vision and focus on company objectives. Lower level managers are less likely to initiate or suggest change, even though they may realize its ultimate benefits.

In our example here it should be the company CFO who must initiate this change as we see in several of the blog entries on this site. A good example is “Become your Company’s Chief Future Officer”.

As for me, personally, I would like to think that I am more motivated now than before to find better ways to perform some of my tasks, even though I realize I might step into new territory and perhaps encounter temporary difficulties. What I do know is that changes well planned are worth making.

Tags: analysis, budget maestro, budget software, budgeting, budgeting and forecasting software, budgeting and planning, budgeting software, business budgeting software, cash flow, cash flow analysis Tagged , , , , , , , , , , , , ,

Are Financial Planning and Cash Processes High Priorities on Your List?

See what industry experts and companies’ finance executives think

I recently read the results of the 2015 Finance Priorities  survey conducted by the global business consulting and internal audit firm Protiviti which confirmed my observations and experience working with clients in a variety of industries. To quote the first three most important findings, which also represent the top priorities of finance executives:

1.       Finance functions are striving to gain greater visibility toward the “cash” horizon.

2.       Finance executives are placing more importance on strategic planning, risk management, executive dashboards, profitability analysis and other strategic areas of financial analysis.

3.      Finance functions want to manage and improve related processes in a comprehensive manner.  Strategic planning, budgeting and forecasting rank among the highest priorities in the entire study, which demonstrates as intent to strengthen overall corporate performance management.

This clearly confirms that corporate strategic and financial planning is not only essential but also greatly recognized as such by the 372 participants in this survey who are a good representation of finance executives and managers across many industry sectors.

The conclusion is that strategic planning, budgeting and analysis must be an integral process in finance, with its results clearly and timely communicated to executive management, the Board of Directors and certain shareholders.  I am encouraged that the survey participants have recognized this and correctly voiced their opinions.

As the number one finding in this survey indicates, Cash remains the most important component in finance.  It is cash that allows a company to grow and achieve its objectives, but also to survive in difficult economic times.  A company can be very profitable according to its income statement, yet suffer a chronic shortage in cash and lack the ability to meet its cash obligations or finance its basic operations.

As a business owner, CEO, CFO or finance executive, you must be able, at all times, to forecast the cash balance at each accounting period and how much cash will be required in each period in order to meet obligations arising from business expenditures, purchase of inventory, incurring payroll and related expenses, acquisition of assets, loan and line of credit payments and other cash related transactions.  The sources of cash are from customer account collections (AR), borrowings from lines of credit, issuing of long-term debt, selling shares in the company, and from sale of assets.

Since there are many accounting transactions affecting cash every day, its balance will fluctuate during the accounting period and over a period of time you will notice an upward or downward movement of this balance as measured at the end of each period.  Similarly, if you rely on a bank line of credit to finance your operations, you may have a zero balance in your operating account and your line of credit balance will fluctuate.

Whether it’s the cash balance, the line of credit account balance, or any long term loans, you need to know and well in advance what these balances are going to be and whether or not you will have access to this cash and how much.  This is part of a prudent and disciplined planning and budgeting process, every responsible finance organization should employ.

Those who use traditional methods to forecast cash and other budgeted data, by using spreadsheets with their inherent limitations and likelihood of errors, or perhaps, upgrading to a purpose designed planning and budgeting solution that requires users to perform extensive programming and provide formulas, functions and links, have discovered that cash planning and forecasting is not trivial.

The fact is that many organizations are not able to forecast cash, credit line utilization, loan covenants compliance and other key finance ratios and operational KPIs despite the fact they have implemented expensive and seemingly powerful software solutions.

My blog entry titled: “Cash Flow Statement: One of your Most Trusted Tool” demonstrates how the finance organization can obtain a complete and accurate Statement of Cash Flows for all budgeted accounting periods, using the existing planning and budget data.

The second and third findings of the Protiviti survey provide clear evidence that many finance organizations are still struggling with achieving timely and meaningful financial analysis, using both planned and actual data.  This implies that spending money and effort on sophisticated systems may not be the right solution if these systems fail to provide the required output or the outcome expressed as highly desirable in these top three survey findings.

Several of the blog entries on this site are focused on the importance of periodically planning and budgeting and continuously analyzing both actual and budgeted data; good examples are: Why CFOs Need to Adopt Financial Analytics“ and A Physical and Mental Health Predictor? A Budgeting Analogy.

I continue to marvel at the accomplishments of Centage Corporation with its Budget Maestro with Analytics product line and have written about this solution and referenced it throughout this blog. The conclusion those familiar with this product must come to after reading the Protiviti survey results is that the Budget Maestro product line delivers and overcomes two of the most common challenges that finance organizations face:

1.      Providing a clear, accurate and complete visibility into the “cash horizon”.

2.      Allowing the construction of a strategic plan driving a financial plan, year after year, and real time analysis into the future, present and past Analysis of Everything.

Having these top priority challenges conquered is no trivial feat. I am glad that a sensible and effective software solution that does just that actually exists.

Tags: analysis, budget maestro, budget software, budgeting, budgeting and forecasting software, budgeting and planning, budgeting software, business budgeting software, cash flow, cash flow analysis, cash flow budgeting Tagged , , , , , , , , , , , , , , , , , , , , , , , ,

The Candid Customer: A New Q&A Series

Welcome to a new series on the “Budgeting and Forecasting Experts Blog” – The Candid Customer! We are committed to sharing the best budgeting and forecasting best practices, so who better than our very own customers to give you an inside look at their budgeting and forecasting journey? Each month you’ll hear from financial professionals just like you who are working hard to empower their organizations with the most accurate, relevant financial insight. This week Controller Mark Howard from Pumps, Parts & Service, Inc., shares his thoughts on how Budget Maestro has changed his company’s annual budgeting process for the better. Leave us a comment and let us know how you like the series!

Q: Tell us about your business?

A:  We are Pumps, Parts & Service, Inc. (or PP&S) based in Charlotte, NC. We are a regional wholesale distributor of rotating and process equipment for the municipal and energy markets as well as industrial clients, including steel and chemical manufacturers. We have been in business for over 30 years and today have nearly 60 employees across five regional sales and service centers in the Southeast covering Alabama, Georgia, North Carolina, South Carolina, Virginia and the Florida panhandle.

Q: What was your budgeting challenge?

A: We needed to improve our annual budgeting process. The annual budget was typically built in large, complicated Excel spreadsheets with embedded formals and the multi-tabbed spreadsheet included complex revenue models and personnel expense models for each of our five business units. It was so cumbersome that it often required seasonal help from outside accountants to prepare budget data!

Q: Did you look any many solutions to solve your budgeting dilemma?

A: Yes, we looked at three different options including budgeting software packages from Prophix, Adaptive and Centage.

Q: Why did you choose Budget Maestro initially?

A: Budget Maestro was very intuitive and the workforce planning module was especially attractive as we needed to get a better handle on our personnel expenses across each business unit. Plus I liked that the software was offered both as an enterprise version and as a single seat license.  The ease of use, coupled with robust reporting and drill down capabilities made Budget Maestro the right choice for us.

Q: Now that you have been using the product what do you think?

A: By implementing Budget Maestro to streamline the planning and forecasting, we’ve been able to considerably improve the annual budgeting process. We can now merge data from General Ledger accounts and manipulate the data by key account, territory, or business unit to develop top line revenue. The product’s drill down capabilities then allows me to view the data in smaller denominations like health benefits and 401(k) expenditures. Plus, I can isolate certain expenses and flag inconsistencies quickly which means I can concentrate on managing the process and planning for results instead of double checking Excel formulas.                                     

Q: What is one of your favorite things about the product?

A: In addition to Budget Maestro’s functionality and stability, the support has been great – even after seven years!  You can tell the Centage team is committed to helping each customer understand the product and how to best use it for their specific budgeting and business requirements.

Tags: analysis, budget maestro, budget software, budgeting, budgeting and forecasting software, budgeting and planning, budgeting software, business budgeting software, cash flow, cash flow analysis, cash flow budgeting, cash flow reporting, financial planning software, forecasting, payroll planning, personnel planning, quickbooks, scenario planning, spreadsheets, variance analysis, what-if analysis, what-if scenario, workforce planning Tagged , , , , , , , , , , , , , , ,

Replace Excel with a Dedicated Planning, Budgeting and Analysis Solution

But make sure that moving away from spreadsheets doesn’t land you back in the same spot.

I read a recent article on TechTarget.com titled “How to know when it’s time to dump Excel for BP&F software”, authored by Linda Rosencrance. It lists and explains seven distinct signs showing that it is a good idea to move away from spreadsheets to a more robust and dedicated planning, budgeting and analysis solution.

The seven compelling points mentioned in this article should be enough to convince any person who is responsible for developing and maintaining a corporate budget that other, much better tools exist for use in this important process. Finance management should also recognize the drawbacks inherent in a spreadsheet-based process and push for an immediate change.

In recent years I’ve seen many organizations of various sizes make the transition. I’m also seeing an interesting phenomenon developing:  While the change away from spreadsheets is fundamentally good and meant to result in positive benefits to many individuals and several finance functions in the company, there are solutions on the market today that, in my opinion, entirely missed the point of developing a non-spreadsheet, dedicated planning, budgeting and BI software application.

On the surface it seems that moving the application into a database environment is the right thing to do; however, beneath the surface there seems to be something very obvious:  Users are still required to design and place formulas, functions and links in various places in the application in order to build a model and get meaningful results. In a sense, this is quite similar to working in a spreadsheet-based environment with its many pitfalls and shortcomings, some of which are:

  1. Substantial programming of formulas and links, with or without the help of outside consulting. Inevitable introduction of programming and formula errors into the model.
  2. Complex and cumbersome maintenance of the model, especially if there are changes to the business (e.g., new product lines, locations, mergers and acquisitions).
  3. Systemic and comprehensive internal control environment (change management) must be maintained in order to mitigate risks inherent in use of formulas, functions and links in spreadsheets used for financial applications. This is unlikely to exist even in larger organizations.
  4. Costly implementation, considering substantial outside consulting and company employees’ time.

For the reasons mentioned above I always encourage users to fully evaluate the different options they have once the decision to move away from a spreadsheet method has been made. Just moving away from spreadsheets may be very compelling for the seven reasons given in the referenced article, but unless the alternative is carefully researched, companies may find themselves in the same situation they were trying to get away from in the first place.

Readers of this blog know that I’ve been writing about a specific solution I like: Budget Maestro from Centage Corporation (www.centage.com), and for a good reason (actually many good reasons).  One of the main reasons I like this application is that it is a true departure from use of spreadsheets.

It is evident to me that the designers of Budget Maestro made a conscious decision to not only rid this process from use of traditional spreadsheets (for the obvious benefits listed in the above TechTarget.com article), but also to never force users to apply a single formula, function or link in the entire product. To me this is a very significant departure from the traditional process, including many of the database-based solutions. The four solution shortcomings listed above simply do not exist with the use of Budget Maestro.

Knowing that Budget Maestro is a comprehensive product with several pre-programmed dedicated business modules, and not having to input a single formula, it makes it so much more appealing to anyone thinking of moving away from spreadsheets.

And this makes it very hard to come up with a reason why this product, and perhaps other solutions (I personally have not seen any yet) that are a true departure from spreadsheets should not be selected.

Tags: analysis, budget maestro, budget software, budgeting, budgeting and forecasting software, budgeting and planning, budgeting software, business budgeting software, cash flow, cash flow analysis, cash flow budgeting, cash flow reporting, financial planning software, forecasting, payroll planning, personnel planning, quickbooks, scenario planning, spreadsheets, variance analysis, what-if analysis, what-if scenario, workforce planning Tagged , , , , , , , , , , , , , , , , , , , , ,

Become Your Company’s Chief Future Officer

Why CFOs must be able to predict their companies’ future and how they can do it

Proformative.com, a premier website for accounting and finance professionals recently announced their annual CFO Dimension conference to be held this year in New York City on the 19th and 20th of October, 2015. This year’s conference theme is “The CFO as Chief Future OfficerTM – Driving strategy, Leadership and Innovation”. This year, 300 senior level finance, accounting and treasury professionals are expected to attend.

As we’ve seen in several of the blog entries on this site, the CFO’s position and responsibilities have evolved in recent years and the perceived association of their role with just the accounting and finance functions is simply not true anymore.

In the blog entry titled “CFO’s Big Picture”, I discuss how the CFO role evolved from a “chief accountant” to a more strategic role, relying on high quality, timely and accurate data to be able to help navigate the company.

The CFO’s Revised Job Description” post suggests that CFOs must now oversee areas such as IT, Legal and Operations, in addition to Finance, Accounting, Reporting and Compliance.

And finally, “Why CFOs need to adopt Financial Analytics” discusses the important practice and discipline of engaging in routine analysis of operations and financial data, both actual and forecast-ed, where CFOs are expected to understand operational and financial results and the underlying reasons for any unexpected results or deviations from budgets or forecasts.

As many of us can clearly see and actually experience in our daily jobs, the CFO position, even in smaller companies, is not the same it was only a few years ago. This is partly due to the realignment of the company’s upper management’s duties and responsibilities, but can also be attributed to a range of technology products aimed at solving the problems and challenges that most organizations face on a daily basis, mostly in long term strategic planning as well as financial and operational planning.

We’ve also seen on this blog that for small and medium size businesses (SMB) I highly recommend a suite of software products published by Centage Corporation: Budget Maestro, Analytics Maestro and Link Maestro.  I have been a long-time user of these products and went through the various version changes and upgrades over the years, and always felt comfortable that this product line had two simple and well-focused purposes:

  1. To empower company management with the ability to see, understand and make informed and timely decisions that will affect future performance of their organizations.
  2. To enable the planning, budgeting and analysis activities by offering a software solution that through built-in business rules and a user formula-free process can automatically generate a complete and accurate budget.

To do that, the software is able to both present future expected results via a set of future period financial statements and other reports, while monitoring past performance, through direct access to actual accounting data, formatted and ready to display in any desired manner.

The ability to access actual data as soon as accounting periods are closed and immediately compare with “future” versions of this data (i.e., budget data) has a profound impact on how the CFO and other members of the management team can move to make decisions with a level of confidence never before possible.

CFOs and CEOs can finally run their organizations based on more facts and less intuition or guesswork. Major mistakes can be avoided or at the least minimized and risks mitigated.

I think that with tools such as Budget Maestro with Analytics you too can become the “Chief Future Officer” in your organization.

Tags: analysis, budget maestro, budget software, budgeting, budgeting and forecasting software, budgeting and planning, budgeting software, business budgeting software, cash flow, cash flow analysis, cash flow budgeting, cash flow reporting, financial planning software, forecasting, payroll planning, personnel planning, quickbooks, scenario planning, spreadsheets, variance analysis, what-if analysis, what-if scenario, workforce planning Tagged , , , , , , , , , , , , , , , , , , , , , ,