10/15/2019

The devil is in the variance analysis Actuals v Budget

Senior executives are demanding more detail in their management reports. The amount of data available to finance departments has exploded and decision makers see this as an opportunity to get more insights into how the business is performing. Having the ability to drill down into the detail is vital but a data-driven organization also brings challenges for finance.

Difficult to produce accurate financial reports

Management accounts are becoming more complex and because most businesses still perform variance analysis using Excel, this means that tracking budgets to actuals can be a laborious and costly exercise. Spreadsheets can often lack flexibility and the static nature of spreadsheets makes it difficult to produce quick and accurate financial reports. The more stages and personnel there are involved in gathering and manipulating data, the more opportunity there is for inaccuracy.
 

Real-time, detailed variance analysis

Most businesses perform variance analysis on a periodic basis, monthly, quarterly or annually in enough detail to allow managers to understand what's happening to the business while not overburdening staff. But by the time the information is produced it is already out of date. Using software solutions businesses can produce the detail decision makers’ demand in a more timely way.Real-time, detailed variance analysis is now possible with technology solutions and the right solution should enable finance to do more than simply present the numbers to the board. Finance should be freed from the drudgery of back-office processing and shift from a reporting function to a leadership and guiding role. Finance can add value to the business by acting as a strategic adviser, explaining what’s behind the information and pointing out possible solutions to any adverse variances.
 

Value to the business

Modern finance solutions have been engineered to bring the budget and actual information together for analysis and add value to the business. Most new technology can support active planning and reporting, empowering finance teams to better manage their business.

 

A good report should contain all the information necessary to enable quality decision-making at board level. It should lead directors to ask the right questions and initiate actions that facilitate the businesses strategic aims.

 

According to CIMA a good information system should: 

  • be defined by the company’s operating profile, not the other way round

  • distinguish between the critical success factors and those that are merely desirable

  • have an architecture that’s flexible enough to survive technological and business changes over time

  • be scalable, offering key information down to detailed analysis

  • be thoroughly integrated with the board’s reporting process
     

Cloud-based technology

It is not necessary to spend enormous sums on complex IT systems, cloud-based technology can combine financial reporting, planning, and operational metrics making it easy for everyone in the business to access and update reports, whether that is from a granular level to the consolidated reporting summary, and everyone can drill down into the information they need, when they need it.
 

Focus on strategic analysis

Freeing finance from manual data gathering allows them to focus on strategic analysis and direction. Centralising data in the cloud and having one simple system simplifies the work for all users, reduces system maintenance and saves costs. This allows the office of finance to elevate the reporting function, providing executives with the analysis they are now demanding for better decision-making.
 

Mercur Business Control

Mercur Business Control can become your organization's primary tool for analysis and meets all your requirements for fixed and flexible reports, and dynamic analysis. 

Mercur Solutions has developed and delivered advanced and high-quality solutions for planning, reporting and analysis for over 40 years. Its’ performance management and business intelligence software can support different technical environments and very diverse requirements for customers across the globe. 

 

Would you like to know more?

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