FESA CONSOL

FlexSystem

Multi-scenario Budgeting and the Risk of Inaccuracy

Issues

Annual budget preparation and re-forecasting often involves both accounting and non-accounting personnel and these tasks are often undertaken simultaneously with finance’s usual daily tasks. Often put together with a combination of multiple scenarios and assumptions there is always the potential for mistakes as many different factors like the ones below are taken into account :

 Product mix and profitability examples such as 10% growth in product A , 20% growth in product B, new products introduction, changes in price plans or margin changes to resellers.

 Departmental overhead budgets may vary by location and function, e.g. salary increments.

 CAPEX:Measurement, recognition rules such as depreciation and amortization policies

 Budgeted independent influences such as interest rate, inflation rate, or tax rates.

 Cashflow scenarios such as DSO, creditors days, seasonality of sales and etc.

When each user is required to modify or amend different data sets, the potential is there for the process to get muddled and for errors to occur.

  

Expectations

The system must reduce complexity and its associated risk through the separation of budget computational logic from the data source.

  

Solutions

FESA Consol offers a full spectrum of computational rules to support group consolidation as well as budgeting. Our approach of setting these rules rather than the usual traditional method of hard coding these rules substantially reduces the time of implementation or modification.

  

Benefits

Benefits The lead time for each budget scenario is reduced significantly and budget data is stored in a more secure environment through a process of data validation and authorization. So, the overall quality of budget reports is improved substantially.