Advanced Planning , Forecasting and Budgeting

Introduction

As an accountant, do you want to become more than a “number cruncher” and add value to your organization through your strategic recommendations? As a business manager, do you want to know where to look in the sea of budgeting and forecasting numbers for your strategic planning and analysis

This practical course provides an introduction to the analysis that can be built into forecasting and budgeting developed in spreadsheets. Using simple statistical tools and an overview of some of Excel’s little-known functionalities, this course will provide attendees with a pragmatic approach to enhance the efficiency, effectiveness, and presentation of their budgeting forecasting.

Insight + Hindsight = Foresight

Aimed at all professionals involved in the budgeting and forecasting process, this course shows you how to reduce risk in your decision making and your recommendations by using budgets, qualitative and quantitative analysis, and by utilizing our kit bag of tips, tools and techniques.

Objectives

Over four intensive Modules, this course will:

• Help attendees to understand develop and execute a strategic business plan
• Link budgets and forecast to the business' strategy
• Provide a practical understanding of Microsoft® Excel's data forecasting and charting functions
• Quantify the risks and rewards of estimating future assumptions and outputs
• Explore different forecasting and trending methods
• Equip attendees with several ways to confirm and optimize key outputs, leading to better decisions
• Teach you several ways to analyze and present key outputs

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practice. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

This course will suit financial analysts, management accountants, and all professionals who have vested interests in forecasting trends at the strategic, tactical, operational, and planning levels.

• Middle Management
• Operations
• Middle and Back Office
• Financial and Product Control
• Finance Business Partners
• Planning and Budgeting
• Management, Statutory and Regulatory Reporting
• Auditors and Internal Control
• Risk and Compliance Regulators
• Accountants and Consultants
• Graduate and Management Trainees

Course Outline

Module 1: Overview

Often the role of the Finance Department is limited to pulling together the numbers. Sometimes a strategic plan lacks concrete number support. Both of these scenarios overlook how a budget/ forecast can integrate with strategic planning.

What is “strategy”?

• why actions often speak louder than words for successful businesses
• how a strategy is developed and how/why it continues to evolve
• Quantitative vs. Qualitative consideration

Developing and executing a strategy

• Development and analysis
• Reviewing existing competencies
• SWOT analysis
• Porter’s Five Forces
• PESTEL analysis
• Ansoff’s matrix
• Blue Ocean Strategy
• Right people, right time, right now
• Total quality management
• SMART implementation

Laying the foundations for a successful business

• Mission and vision statements
• Strategies
• Objectives
• Goals

A strategic perspective in budgeting and forecasting

• Definitions of budgeting and forecasting

Risk-based budgeting and forecasting

• Why do we need a risk perspective in budgeting/forecasting?
• Risk factors affecting your budget/ forecast
• Risk vs. Uncertainty
• Types of risk
• Business
• Operational
• Financial
• Enterprise
• Tools of the trade

Working capital management

Module 2: Budgeting

Budgets are often criticized by end-users for constraining them. Module 2 looks at how to make the budget and the budgeting process useful for the business.

Introduction

• “Best practice” quantitative budgeting
• The factors that govern the model structure
• The foundations of a budget model
• Why templates don’t work

Budgeting

• The budget cycle
• Reasons for budgeting
• Types of budgets and budgeting methodologies
• Zero-based budgeting
• Incremental
• Top-down
• Bottom-up
• Top-down and bottom-up
• Budget risk
• Factors to consider in developing a budget
• Practical issues
• Model bias - how to get stakeholder ownership
• Methods of building model assumptions
• Building a working analysis from history
• Being able to update with actual data as it becomes available

Practical example: Developing a budgeting model

Budget management

In the two Module’s challenging business environment, cost management and cost reduction are keys to business success.

Managing costs

• Understanding the drivers of cost
• Variable vs. Fixed cost issues
• Cost Volume Profit (CVP) and breakeven analysis
• Activity-based management and activity-based costing principles
• Value chain analysis
• Non-financial costs: e.g. staff morale, customer loyalty

Proactive

• Cash discount/price incentive schemes
• Inventory management
• Optimizing assets’ economic lives
• Lease vs. Buy
• Reducing controllable costs
• Refinancing/amending the capital structure

Reactive

Accounts payable teams

Credit collection agencies vs. Debt factoring

Supplier negotiations

Vertical integration/partnerships

Module 3: Variance analysis and forecasting in context

Improve your forecasting skills to turn historical data into future management information to assist your strategic planning, emphasizing the importance of targeted variance analysis.

Forecasting in context

Alternative to point estimate modeling

• Scenarios
• Sensitivities
• Simulations

Common methods of financial forecasting

• Create formula based data forecasts
• Regression analysis
• Bias and error estimation
• Scenario modeling
• Using PivotTables
• Using 1-D and 2-D data tables
• Using the Scenario Manager
• Calculating and graphing moving averages
• Defining and solving problems: e.g. Goal Seek vs. Solver

Key driver analysis

• Creating a waterfall chart
• Creating a tornado (sensitivity) chart
• Deterministic vs. Probabilistic methodologies

Variance analysis

• Flexible budget variances
• Operational vs. Planning issues
• Key variances
• Sales price
• Sales volumes
• Sales mix
• Materials
• Lab our
• Overheads

Modeling variance analysis

Module 4: Analysis and reporting

What do we do with budgeting/ forecasting results? This session discusses the analytical and business skills for your workplace and how you would manage the process strategically in practice.

Key outputs of a budget model

• Income statement vs. Cash flow
• Confirming key outputs
• Deriving key inputs
• Developing KPIs

Considering financing requirements

• Returns on capital
• Returns of capital
• Key concepts of financing:
• Risk
• Return
• Ranking
• Analysis of results
• Accounting ratios

Data analysis

• Using trend analysis
• How Goal Seek, Scenario Manager, and Solver may help
• Revisiting risk: The role of scenario, sensitivity and simulations analyses
• Strategic options analysis
• Real options analysis
• Six Sigma
• Linear optimization

Reporting and charting

• The Dashboard Summary
• Chart examples
• How to plot trends and determine relationships
• Say it with charts: Using the right chart at the right time

Business planning

• Implementing a strategic plan
• Developing the nuts and bolts
• Key elements of a business plan

Monitoring mechanisms to evaluate business performance

• Organizational structure
• Key outputs
• SMART measurements
• Key Performance Indicators (KPIs)
• Balanced scorecard
• Strategic, Tactical, Operational and Planning (STOP) budgets
• Post Implementation Reviews (PIRs)