Sustainable. Enable the redesigned budgeting and reporting processes to easily adapt to changes in business and industry. In this part, you will read interviews with experts who have analyzed and improved budgeting and reporting processes.
INTRODUCTION TO BUSINESS PROCESS IMPROVEMENT
ABOUT BUSINESS PROCESS IMPROVEMENT
But the processes that drive a company's budgeting and reporting activities haven't changed much, except for the latest advances in technology. After the introductory chapters, this book discusses in detail how to improve your budgeting and reporting processes.
WHEN BPI IS VALUABLE
Another access-related bottleneck occurs in the distribution of reports to managers across the organization. Create budget and reporting • Account structure (chart of accounts) processes that can be easily changed • Technology.
SMALL AND LARGE PROJECTS AND ASSOCIATED RESOURCES
A larger company needs to involve key people from all related areas: accounting, finance, analytics, senior management. Larger company Expect to involve 5 to 10 people at various levels and most likely an external consultant to lead the project, mediate, advise, etc.
RETURN ON INVESTMENT OF BPI PROJECTS
BEST PRACTICES, TRENDS, AND TECHNOLOGY
Historically, it has been the task of the company's IT department to move data from one system to another. Another key focus of the Balanced Scorecard approach is linking employee compensation to performance metrics.
SELLING CHANGE TO YOUR ORGANIZATION
Top management, the project team and the members of the organization each need a customized version of your sales pitch for maximum effect and support. Reduce potential risks to team by defining the scope of the project as clearly as possible.
BUSINESS PROCESS
IMPROVEMENT PROJECT
GETTING STARTED
As mentioned, in this part of the book we take a closer look at budgeting and reporting processes and how they can be improved, to arm you with knowledge and a set of useful tools for your own financial BPI project. But before diving into the budgeting and reporting processes, you should develop a clear picture of the roles that end users, administrators, and managers play in the budgeting and reporting process. As you will see, all the improvement opportunities are important to maximize the potential results of your BPI project.
If your BPI project is small, you can do most of the work yourself, supplemented by some discussions and meetings with end users and decision makers involved in the budgeting and reporting processes.
DUE DILIGENCE
Just stating your business value will not help; but if a company practices what it preaches, then it can smooth the process. It is the uncertainty related to a company's ability to earn a reasonable return on its investment given revenue and cost factors that include competition, product mix, and management ability. These changes can be better managed if leaders are aware of a company's strengths and weaknesses before changing the dynamics of its organization.
The company's strengths were in software, but it also had tremendous strengths in marketing, so it acquired a company that created video game software and designed a video game for the home.
IMPROVING THE
BUDGETING PROCESS
It is also useful to have an evaluation meeting at the end of the budgeting process to determine how the process can be improved in the future. If managers ask for additional information in the middle of the budgeting process, it will cause a lot of delays. Explaining the budget process to necessary employees to ensure consistent adherence to the budget process.
If your employees are going to participate in the budget process, they need to be accountable for their numbers.
REVENUE BUDGETING
It is necessary to determine how employees and managers will use this data for the good of the company; employees, managers and directors will obviously have different needs. They would benefit from insight into last year's revenue and management's vision and goals. A bottom-up approach works best in revenue planning because managers will have the most intimate knowledge of the company's customers and products.
To create an accurate budget, you must be aware of the vision of the company.
EMPLOYEE BUDGETING
Management must be able to set bonuses based on the departmental evaluation they receive from the corporate offices. There should be a fixed annual percentage for all employees, which managers can adjust if necessary. Some companies have more than one bonus month, but the months must be consistent for all employees.
Once all of the previous data has been entered, the system you use should be able to calculate a monthly salary, the bonus, and any benefits.
COST OF SALES AND OPERATING EXPENSES
Thus, if revenue is budgeted by product and region, then it would be useful to similarly budget for cost of sales. You can use a top-down or bottom-up approach to cost of sales budgeting. Cost of sales and expense assumptions will be based on how you enable users to budget this data.
The system should then be able to calculate the total cost of sales per account.
CAPITAL EXPENSES
The total amount is the amount that will be depreciated over the life of the project. This calculates whether the present value of the cash flow is greater or less than the original cost of the project. The cut rate is determined by the financing costs for the company and the project's risk level.
The form will then automatically calculate the depreciation for the income statement and the cost of the product will be saved in the balance sheet.
BALANCE SHEET AND CASH FLOW STATEMENTS
We will assume that cash flow is calculated from the balance sheet and income statement budget; therefore, all assumptions will be for the balance sheet budget only. First you need to decide whether the cash flow will be determined from the balance sheet and income statement or will be prepared separately. The balance sheet should be the only area in which executives will put numbers; cash flow will be calculated from the income statement and balance sheet.
Ideally, cash flow will be determined from both the balance sheet and the income statement.
ALTERNATIVE BUDGETING APPROACHES
The manager will determine the costs associated with the sales process, rather than determining the costs of the entire department. There will be a better understanding of the company's activities and how they relate to the costs of those activities. For one, it is very difficult to find the key measures that drive about 80 percent of the organization, so many managers will introduce too many measures.
Many managers will also ignore non-financial measures, but this is one of the main benefits of the Balanced Scorecard.).
IMPROVING FINANCIAL REPORTING PROCESSES
Workflow • We have several approval steps for journal 4 Enhance Postings; if no manager is available, the process will be executed. Technology • We have more ERP instances than we need, and 4 Improve the Chart of Accounts is inconsistent with that. Best • We disagree on the top 5 improvement practices that are important for the entire company.
Technology • We rely on spreadsheets to report on 4 Improved key indicators such as market share, quantity.
HUMAN RESOURCES, TRAINING, STRATEGY, AND WORKFLOW
Many of the delays that occur in the consolidation and preparation of financial reports originate in transactional systems, where entries can easily be made to the wrong accounts. Aligning financial and reporting systems with the company's strategy requires not only rapid delivery, but also the delivery of the right metrics. EVA is the net operating profit minus an allowance for the opportunity cost of the capital invested to achieve that profit.
Much of the inefficiency in the reporting process stems from data quality issues.
BEST PRACTICES
Part of the virtual closing concept is that closing becomes an ongoing activity rather than an end-of-period crisis. One of the advantages of technological tools such as database query tools is that information about variances can be found in advance. This will facilitate reporting from subsidiaries in local currency, as well as from the parent company.
This team should meet regularly to review the effectiveness of the KPIs on the list.
TECHNOLOGY
You (or your application vendor) will probably decide to use a combination of relational and OLAP databases as the physical structure of the data warehouse. The task of organizing data in the relational database model, also known as normalization, seeks to eliminate redundant data by dividing related sets of attributes into separate tables (where an attribute corresponds to a column in a table ). Data evaluation will result in a collection of information about the source systems and their content that will facilitate the correct use of the data, in the right context.
Do you need to add special characters such as quotes, commas or dashes to make the data more readable for the user.
BPI MAKEOVER
To graphically represent this future state, you can follow the same workflow diagram conventions that you used to frame the process as it is. Exhibits 20.1 and 20.2 are examples of how processes may change as a result of a BPI initiative. By identifying the weak points in the process—those tasks where errors and delays creep in—you can identify opportunities embedded in those tasks and start thinking about ways to improve them.
Which information technologies do we know well, and how can we benefit from that knowledge.
DESIGNING THE ULTIMATE CHART OF ACCOUNTS
CHART OF ACCOUNTS REDESIGN
Perhaps the information needed to evaluate the company's performance can no longer be easily collected, or operations have changed so much that routine transactions cannot easily be entered into the general ledger. However, this approach requires many considerations, such as how to map the historical data captured with the current COA to the new COA. Producing standard financial statements and reports requires significant manual manipulation of the data using a program such as Excel.
Significant amounts of data required to produce financial statements are maintained outside the accounting system (eg many off-line reporting or data collection systems).
