Brief overview of budget planning in FMCG and Retail

Budget planning is an essential step for finance leaders to perform short-term and long-term CapEx Opex planning. To do it fast and at scale requires data inputs from field sales, knowing sales targets, orders placed or in pipeline, the status of pending invoices sent to customers, anticipated payouts to suppliers and more.

When you don’t apply workflow automation in your forecasting processes you will have to manually keep a track of the entire budgeting lifecycle from scratch. You would then have to manually update details by pulling data from disparate systems and databases and keep it ready for further inputs or validations from other team members.

It requires manual mapping of data sets to run comprehensive reports. Not to forget, these reports also need to factor in the risk of inaccuracies arising out of manual currency conversions and the cost of employing people to import, export, and input such data.

Deep dive into the purpose of forecasting in both FMCG and Retail

Financial Planning: Budgeting helps companies set financial targets and create a roadmap for achieving them. It involves forecasting of sales, costs, and other financial measures based on historical data, market trends, and business predictions.

Resource Allocation: Budgeting allows companies to allocate funds to different departments, projects, or product categories based on their strategic importance and expected returns. This ensures, resources are used efficiently and in accordance with the companies’ goals.

Expense Control: By setting specific spending limits for various cost categories, budgeting helps control costs and prevents overspending. It provides a mechanism to monitor expenses and take corrective actions when necessary. 

Performance Evaluation: Budgets serve as benchmarks against which actual financial performance can be measured. By comparing actual results to the budgeted figures, firms can identify areas of improvement and take informed decisions. 

Decision Making: Budgets play a crucial role in decision-making processes. They help management assess the financial feasibility of new initiatives, expansion plans, investments, and other business decisions. 

Goal Alignment: Budgeting ensures that all departments and teams align their objectives with the overall financial goals of the company. It promotes accountability and a shared understanding of the company’s financial direction. 

Cash Flow Management: Budgeting assists in managing cash flow by predicting the timing of cash inflows and outflows. It helps companies maintain sufficient liquidity to meet their financial obligations. 

Contingency Planning: Budgets provide a basis for contingency planning. Companies can identify potential risks and create backup plans to handle unforeseen circumstances that may impact their financial performance.

Opportunity to save up to 50% of the budgeting cycle time

You can save up to 50% on the time it takes to perform various budgeting scenarios and see the resulting calculations that meet your objectives. Our budgeting workflow designer represents a fast and easy way to reduce this processing time by 50%. It can empower your field sales and operational teams to inputs data once and have it auto-update in every other reporting view on its own. That way you can see all the required data on one single dashboard. The data required from different branch locations, store locations, and field executives must be easy to input and seen as one reconciled reporting view.  

The data representation must also allow users to view the financial modelling and see the impact of any changes made to the data on the CapEx and OpEx as an Excel format file. This way it can be downloaded from any device remotely and from anywhere. Workflow automation will even allow users to make corrections to the downloaded files and auto-update it once for everyone to see the same changes thereafter. Thereby, excel-based automation is what you need to map existing Excel templates back to the database, enabling a smoother transition for you and all your colleagues. 

Brief overview of forecasting in FMCG and Retail

An efficient forecasting system is required to report cash flow accurately and this can at times require integrating eight disparate spreadsheets into one source of the truth. Accurate forecasting gives you the power of breaking down one static annual budget into several parts based on the needs of your business. There will be times when based on short-term forecasts, the budgets also need to be recalibrated and this requires data-driven feedback from different budget owners in the organization. Because relying on qualitative feedback of any business leader is an unscientific way to run the business, it is advisable to maintain a nine month long rolling forecast along with a quarterly review of business performance based on which fact-based changes can be made.

Among several of our clients it is typical to witness disparity in reporting and reliance on three or more legacy ERP systems. They would first have to combine disconnected templates and as a next step, the financial reporting would require a final consolidation of data which can take months at a time. Lack of integration with an excel based planning can further lead to different users in the systems having to manually input data from their spreadsheets to the systems recommended by IT

Deep dive into the purpose of budgeting in both FMCG and Retail 

Demand Planning: Forecasting helps companies estimate the demand for their products or services in the future. Using historical data, sales data, market trends, and seasonal patterns companies can make informed decisions about how much inventory to produce or stock. 

Inventory Management: Accurate forecasting enables companies to maintain optimal inventory levels. Overstocking can tie up lead and capital to storage costs while understocking can result in lost sales and dissatisfied customers. Forecasting helps strike the right balance. 

Production Scheduling: In FMCG industries, where production needs to be aligned with demand, forecasting plays a crucial role in determining production schedules. It helps manufacturers plan their production capacity and raw material requirements. 

Resource Allocation: Forecasting guides companies in allocating resources effectively. For example, retailers can plan staff scheduling based on predicted footfall, and FMCG companies can allocate marketing budgets according to projected sales. 

Sales and Marketing Strategies: Forecasting provides insights into potential sales volumes, allowing companies to design appropriate sales and marketing strategies. It helps in setting achievable sales targets and evaluating the effectiveness of marketing campaigns. 

Budgeting and Financial Planning: Accurate forecasting is essential for budgeting and financial planning. It helps in estimating revenues, expenses, and cash flow projections, providing a foundation for overall financial management. 

New Product Launch: Forecasting is crucial when introducing new products or entering new markets. It helps in understanding potential demand and estimating the resources required for a successful launch. 

Opportunity to speed-up time taken for accurate forecasting  

To reduce the time taken to perform month-end closures, you need automated or self-servicing, excel integrated systems. Such forecasting systems can empower users from both budget owner teams as well as finance teams to be on the same page, always. It will fully automate collaboration between budget owner teams and finance with a single source of data. As soon as one user updates or inputs or changes the data values, the resulting impact on the calculations immediately take effect. The concerned users in the finance and accounts teams can then be notified about the changes done and validate or take further actions.

Greater collaboration among these two distinct stakeholders ensures numbers are aggregated quickly and recalibrations are performed in seconds. Real-time collaboration enables planning expenses in advance for HR, Operations, Supply Chain, and Marketing related activities. It enables strategic planners from these functional departments to have better alignment with the company’s anticipated cashflow and anticipated revenues.