By Ed Gromann, Chief of Staff and Strategic Initiatives, Centage Corporation
Here’s a thought worth imagining this budget season: what if you could build a budget that was fully synchronized with your financial statements? Four benefits immediately come to mind. First, you could turn around a sophisticated budget model in a matter of weeks, rather than the months it takes to create a plan in a spreadsheet. Second, you could quickly run multiple scenarios by your team in order to assess what your financial statements would look like if you increased (or decreased) sales by 10%, opened a new sales office, or acquired a new company. Third, you could present your budget — replete with what-if scenario tests — to your board early in the Fall, rather than the week between Christmas and New Year’s. And fourth, of course, is that you’ll be able to enjoy your holidays without worrying about the budget.
So are synchronized financial statements a pipe dream? If not, how does one achieve it? Let’s look at the steps needed to get there.
Connect to your GL and financial data
The US business community is currently in the throes of a digital transformation, and it’s time that this transformation hit the finance department. Keeping critical data sources in separate siloes hobbles the financial team. You can’t plan intelligently, meaning that if you don’t have a comprehensive picture of the business, you can’t come up with multiple scenarios as to what may happen and put contingency plans into place. It limits business agility, because luck is the only way to spot important trends in time and either exploit them to your benefit or mitigate them if necessary. Perhaps worse of all, you can’t improve your overall planning process.
Connecting your GL to your financial data will allow you to build a robust model you can use to see how goals and financial assumptions will impact your financial statements. And that’s just the start. The model will streamline and increase the accuracy of your forecast and planning process.
Sync your chart of accounts and actuals throughout the year
Creating a budget is synonymous with creating unreasonable expectations. How is anyone, in the summer of 2019, able to predict what the economy and market will look like in Q4 2020? We can make all the assumptions in the world, but there will always be factors outside of our control that will greatly impact financial statements.
So imagine if the changes made to your chart of accounts and your actuals flowed through your financial plan automatically. Here’s what would happen: your budget would cease to be a static document you update once a year, and morph into a rolling forecast, allowing you to set a long-term (say, 3-5 year) goal, but still optimize the strategy your implementing to get there every quarter. In fact, your rolling forecast could replace your budget entirely if you want maximum holiday enjoyment.
Build dimensional budget models with hierarchical considerations
Spreadsheets are inherently flat documents, which is why so many financial teams struggle to represent a multidimensional company, with all its hierarchical considerations incorporated. Someone should tell them it’s not their fault; they’re simply expecting too much out of a spreadsheet.
If a business had just three numbers to work with — expenses, revenue, profit — budgeting and decision making would be easy, but that’s just not the case. We plan by location, division, product, market sector, and P&L. And decisions can be far reaching: choices made by operations and expenses incurred by marketing can (and do) have direct impacts on sales and customer care.
Building the right hierarchies into a budget is complex, to be sure, but it is the only way to build true flexibility into a plan. Without that flexibility, you have no way of knowing whether you can fund a year-end initiative or have the resources available to take advantage of an unexpected boom.
User drivers and allocations to match your business model
Like anything else, drivers can change throughout the year. CFOs try to enter fixed contracts as much as possible when, say, entering certain manufacturing arrangements in order to predict the fixed cost of raw materials. However, some drivers can become variable quickly, such as labor costs (think of a union strike). CFOs need to adjust these quickly to maintain the credibility of the forecast. Allocations fall under a similar category (assuming they’re driver bases, such as allocating manufacturing costs based on volume). Volumes can vary dramatically from the plan due to forces outside the CFO’s control. If the weather is hotter than normal, a beverage company’s customers will drink more iced drinks than hot ones, requiring the CFO to change his or her volume mix, which in turn, will change manufacturing expense allocated expenses. Synchronizing your plan to the financial statement will give you the earliest opportunity to assess if you’re on target to meet your revenue goals, and to warn the management team or market if necessary.
Staying connected: keeping the numbers moving in the finance industry
By Robert Gibson-Bolton, Enterprise Manager, NetMotion
2020 will certainly be hard to forget. Amongst the many changes we have come to live with, for many of us it has been adapting to a new style of working. Whatever your take on it is, remote working, working from home or even agile working, one thing remains clear – for many of us, this could be the new-normal for the foreseeable future. The professional services sector is no different. For example, many finance practices around the world are now allowing staff to work from home part of the time. In addition, a recent KPMG report found that half of the UK’s financial services workforce want to work from home after COVID-19.
Will this therefore become the de facto working practice for the finance industry too? We can’t say for sure, but this agile approach to working has certainly caused a major rethink for many firms. And as they evolve and adapt to meet the demands of a different way of working, firms need to ensure that their workforce can seamlessly interact with each other and their clients – this is key if they want to continue to deliver exceptional client service. Whilst financial services organisations everywhere are busy adopting innovative new technologies to better reflect the ‘work from anywhere environment’, they need to ensure secure access to resources and strive towards enhancing the end user experience. Success will be replicating the office working experience at home or wherever else they may be.
It’s all well and good for a firm to boast about the ability of their staff to work successfully from home, but how do they also establish that their people are just as productive as they were before? Whilst the IT department will have to grapple with security and compliance issues that arise from agile and remote working, they must also ensure that their people can connect securely, without eschewing user experience. And it needs to be completely seamless, without compromising the service level provided to clients.
Why all the fuss?
Which brings us nicely to persistent connectivity. Persistent connectivity effectively allows you to do more. How frustrating for the user when connectivity drops, or when the device that they are working on can’t find a network to connect to (or if the device switches between different networks). When connectivity drops, and re-connection is required then there is that small period where the user is not connected at all. And the user might have to re-authenticate or log into their VPN again (most VPNs are rubbish when they lose connectivity). All of these different scenarios ultimately disrupt the user experience – persistent connectivity provides the flexibility to overcome these challenges. When you enjoy consistent connectivity, you are making sure that the technology works as it was designed to work, allowing staff to rely on optimum user experience, anytime, anywhere – in effect, supplying them with that office-like experience, wherever they are. Just think about how many hours might be spent on a train, in a hotel or even on a client site. Consistent connectivity is key here – consistent in any of these locations.
Connectivity will be a fundamental component for successful remote working as firms try to meet the demands of an increasingly mobile workforce. Ultimately, they need encrypted and reliable connections that enable them to quickly and easily reach business applications and services. Working in a disconnected environment can lead to frustrated workers, hardly fitting given all the new remote working policies in place.
Getting the user experience spot-on
When you fine-tune connection performance so that essential business applications run reliably across networks, you are essentially talking about traffic optimization. Mobile traffic optimization ensures that applications, resources and connections are tuned for weak and intermittent network coverage and can roam between wireless networks as conditions and availability change. When connections aren’t performing well, applications that are crucial for job performance can experience packet loss, jitter or latency that can make working on the hoof extremely tricky. Compared to wired networks, wireless networks operate under highly variable conditions, including such factors as terrain or congested mobile towers. When you optimise the flow of traffic, you are helping to manage packet loss. Effectively, packet losses are data loss, which happens very regularly when you’re on the move or transitioning between different networks. Applications that require a lot of data tend to become fairly unusable when you hit even minor packet loss, which can be a common occurrence for many on residential broadband or on local Wi-Fi. conversely, NetMotion can enable critical applications to work and prevent disruptions at over 50% packet loss – in this way, employees can rely on technology performing well in situations and locations where it simply could not before. That is incredibly powerful for firms.
The finance industry is facing many of the same challenges presented to other industries. It is a question of balancing the requirement for more sophisticated ways to ensure secure access to resources with the need to enhance the end user experience (key team members in particular). For finance firms everywhere, adopting the right technologies will ensure that their people can enjoy a ‘work-from-anywhere’ environment.
Hong Kong’s Cathay Pacific warns of capacity cuts, higher cash burn
(Reuters) – Cathay Pacific Airways Ltd on Monday warned passenger capacity could be cut by about 60% and monthly cash burn may rise if Hong Kong installs new measures that require flight crew to quarantine for two weeks.
Hong Kong’s flagship carrier said the expected move will increase cash burn by about HK$300 million ($38.70 million) to HK$400 million per month, on top of current HK$1 billion to HK$1.5 billion levels.
Hong Kong is set to require flight crew entering the Asian financial hub for more than two hours to quarantine in a hotel for two weeks, the South China Morning Post reported last week, citing sources.
“The new measure will have a significant impact on our ability to service our passenger and cargo markets,” Cathay said in a statement, adding that expected curbs will also reduce its cargo capacity by 25%.
The airline, in an internal memo seen by Reuters, requested for volunteers among its crew who could fly for three weeks, followed by two weeks of quarantine and 14 days free of duty, adding it will be a temporary measure and not all its flight will require such an operation.
“We continue to engage with key stakeholders in the Hong Kong Government,” the memo said.
The government did not immediately respond to a request for comment.
Separately, a company spokeswoman said the airline could not detail the impact on vaccine transport specifically in terms of cargo shipments.
The aviation industry has been hit hard by the COVID-19 pandemic as many countries imposed travel restrictions to contain its spread.
In December, Cathay’s passenger numbers fell by 98.7% compared to a year earlier, though cargo carriage was down by a smaller 32.3%.
($1 = 7.7512 Hong Kong dollars)
(Reporting by Shriya Ramakrishnan in Bengaluru; Additional reporting by Jamie Freed in Sydney and Twinnie Siu in Hong Kong; Editing by Bernard Orr and Arun Koyyur)
Travel stocks pull FTSE 100 lower as virus risks weigh
By Shashank Nayar
(Reuters) – London’s FTSE 100 fell on Monday, with travel stocks leading the declines, as rising coronavirus infections and extended lockdowns raised worries about the pace of economic growth, while fashion retailers Boohoo and ASOS gained on merger deals.
The British government quietly extended lockdown laws to give councils the power to close pubs, restaurants, shops and public spaces until July 17, the Telegraph reported on Saturday.
The blue-chip FTSE 100 index dipped 0.1%, with travel and energy stocks falling the most, while the mid-cap index rose 0.1%.
“Stock markets are crawling between optimism around the rollout of vaccines and worries that a jump in virus infections and fresh local lockdowns could further affect recovery prospects,” said David Madden, an analyst at CMC Markets.
Britain has detected 77 cases of the South African variant of COVID-19, the health minister said on Sunday while urging people to strictly follow lockdown rules as the best precaution against the country’s own potentially more deadly variant.
Prime Minister Boris Johnson had earlier warned that the government could not consider easing lockdown restrictions with infection rates at their current high levels and until it is confident that the vaccination programme is working.
The FTSE 100 shed 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy.
Online fashion retailers Boohoo and ASOS surged 4.8% and 5.9%, each. Boohoo bought the Debenhams brand, while ASOS was in talks to buy the key brands of Philip Green’s collapsed Arcadia group.
Recruiter SThree Plc gained 0.9% after its profit, which nearly halved, still managed to beat market expectations and the company said it had resumed dividends.
(Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V)
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