We all know the methods used to create favorable departmental budgets and forecasts. Managers ask for more than what’s required with the hope of agreeing on the budget they actually want. Junior managers promise unprecedented results in exchange for executive support and an investment in their new ideas. And, of course, the seasoned, senior managers warn of significant consequences to the company if their specific budget is cut.
This negotiation process is nothing new to the business world, and was the subject of a recent webinar we hosted that I’d like to recap here. Negotiating has been going on for decades. But the best-run organizations have learned that there’s a much better way to do financial planning—one that completely removes the politics and horse trading from the process: Using rolling forecasts with a strategic management tool.
One of our recent webinars, “Rolling Forecasts: Your Guide To Success,” outlines the subject nicely.
It explains how many of today’s top finance leaders and teams opt for a rolling planning and forecasting process to keep a continually updated understanding of the financial state of the company, and allocate resources according to new opportunities and market changes that were unforeseen at the beginning of the year.
Take Hirevue for example. Before Adaptive Insights, it made educated guesses on sales growth and focused on once-a-year planning. While they weren’t wild guesses, they certainly weren’t as tight as they would have liked. With the monthly rolling forecast, the finance team can easily analyze and report on expected closed sales by representative, by ramp rate, and by quota attainment.
“Our finance team has the ability to do rolling 12-month sales forecasts to see a clear picture of revenue and sales projections to plan business performances more accurately, with actuals from NetSuite regularly adding to the planning data,” explained Thom Keyes, director of FP&A for HireVue. “With Adaptive Planning and OfficeConnect, there is tremendous confidence that we have a much more accurate view of the business. It’s easy to build our own reports and extract data to show how our sales planning model works under different scenarios.”
With a clear and updated view of performance throughout the year, budget managers no longer have the pressure of annual budget negotiations as their one shot to secure the resources needed to accomplish all of their goals. Finance benefits by avoiding multiple, extended negotiation meetings and several iterations of budgets, the majority of which will likely be out of date by the time they’re completed.
It also improves decision-making. A true rolling forecast system helps an organization to maintain an updated and holistic view of corporate performance. That means stakeholders and decision-makers are equipped with the information to reallocate and redistribute resources as needed, enabling the company to be more agile and fully capitalize on new market opportunities.
With a rolling forecasts in place for your business, you can remove the poker game of extended negotiation tactics from the traditional planning and budgeting cycle. This should help budget managers feel comfortable with laying their cards on the table so the entire organization can focus on revenue-generating tasks to help grow the business.
Want to learn how a best-practice, active planning process can help you drive business success? An active planning process is collaborative, comprehensive, and continuous—one that results in a better business plan. Better budgeting and forecasting. You’ll get greater visibility into business performance, build confidence in the numbers, make data-driven decisions, and increase buy-in and accountability throughout the organization. Learn more here.