Converting financial model to be used for quarterly management budgets for an international manufacturer, providing a more dynamic and automated basis for future management budgets.
We were engaged by a management consultancy to develop a new management budget tool to replace the existing version which was perceived as being unreliable, requiring a lot of manual intervention, difficult to roll forward and lacking in clarity, too much information etc.
It was felt that the recently completed financial forecast could be used as a basis for the management budgets, but obviously a lot of the functionality would need to be changed to enable automated roll forwards, and integration with management reports for input of actual financial and operating data.
This would also require some of the more formal reporting requirements of the financial model used for a corporate transaction to be removed or refined. However most of the functionality was still required, in particular the profiling of all stock lines which was driving profitability in the model.
It was imperative that the new process could be understood and owned by the finance director and his staff.
Following consultation, we adapted the financial model to address the issues expressed by management. The roll forward mechanism was tested with two dummy roll forwards using historic data, before it was used with live data for the first roll quarterly forward which was performed with the client.
To support future roll forwards we developed a guide to assist with the step by step tasks required to roll forward and populate the model. We also built in controls, protection and checks and balances to prevent forseeable corruption of the model.
The client’s finance team were able to quickly take over the update and management of the new budget, and it immediately replaced the previous budget tool. We were then able to assist with ongoing queries for the first couple of roll forwards, and provide assistance where necessary to add new functionality, for instance increase capacity of number of products (SKU’s). This provided them with an improved process, which could more accurately reflect relationships with key drivers impacting their business.