For any Financial Director involved with Planning, let me start by saying sorry. Sorry that you find yourself having to plan in today’s environment. Sorry that whichever accountancy qualification you have did not quite prepare you for our lockdown world. Sorry that you are almost certainly in the over 99% of companies who are performing differently from predicted, and everyone in your organisation is now looking at you and asking, “What now?”
That term “Business as Usual” (BAU) is almost a taunt. There is no usual, so is there any immediate hope for a new normal settling in for quite a few months, quarters, or years even? There is no certainty and no consensus of when there will be certainty. BAU now stands for Barely Any Use when trying to plan for next year’s budget.
Plan with agility for every future
So, what do you do? How do you plan? How will you explain that plan and how quickly can you react?
‘FORECASTED’ is our answer to those questions. What you need is a planning tool that lets you base your budget on your latest reliable data, probably your actuals this year, plus a best estimate for the forecast to the end of the year. That is where you start.
Then you would need to start seriously tweaking those figures. Not at a detail level of course. There is no time for that. Top-down planning is going to get you closer to where you need to be, and much faster. Drop sales 10%, do the same for COGS. Up online marketing by 15%, delay those product launches or halt the expansion plans. These are top level decisions.
Now analyse those plans. Do they stack up? Have you missed anything? What will each department need to do to run with that plan? How much can they re-plan at a top level?
Bottom-up re-forecasting can work too, generally, for limited numbers of changes. Just don’t think that you have time to revisit the detail of your plan every time Government policy changes, or the trading environment switches up or down.
Speed and Agility will be your watchwords.
Ready to find out how you can forecast with speed and agility? FORECASTED is an out of the box integrated forecasting solution powered by IBM and hosted in the cloud: Find out more at: https://simpsons.igoodev.com/forecasted-2020/
Paul Baron, FP & A Engagement Manager
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