Financial planning has always been a very important – if not the most important – aspect of all business activity. Such planning usually takes the form of budgeting, and it becomes increasingly central to organisations as they grow in size. Nowadays, many finance departments have come to anticipate their annual appointments with budgets with anxiety, frustration and trepidation.

This is only understandable as organisational growth has brought with it increasing complexities in the financial planning process. Although some very good budgeting tools have been developed to deal with such situations, their cost over the full implementation lifecycle is often prohibitive and their return on investment often does not provide investment justification in small and medium-sized enterprises (SMEs), especially after customisation, supplier lock-in risk and training and re-training requirements following staff turnover are taken into account. Financial Planning teams faced with such circumstances, therefore, usually turn to the tool they are most familiar with and which they know is flexible enough to recreate their organisational world-view in a model which they can adapt to multiple uses – MS Excel.

Although many financial planning teams are made up of MS Excel power users, they still fail to use MS Excel optimally to see their jobs through with the minimum effort with the result that resources are sometimes unnecessarily strained during the budgeting period. Unless this activity is properly co-ordinated, it sometimes ends up in siloing, with different departments having their own mini-models and incorporating a hodgepodge of different assumptions to come up with the figures that they need to be able to work, which figures may be totally disconnected from and uncalibrated by historical financial statements.

Equinox can help by providing services in relation to the engineering or re-engineering of the business processes involved in budgeting and by building MS Excel models that interface with your historical accounting system. We can, if needs be, also take over your financial planning for some time until you build your own capacity in the area.

Budgets, however, are not only exercises in modelling the interrelationships between endogenous organisational variables in a MS Excel environment. Proper budgeting requires an understanding of forecasting techniques and their shortcomings, an understanding of the bigger economic picture and the markets of interest with which tocalibrate such models. Equinox can also help you get this aspect of financial planning right.

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