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On August 19, 2016

Why Excel is great for finance but not for planning & forecasting

Can you imagine a finance world without spreadsheets? No, neither can we. Microsoft Excel is the starting place for all things finance. But at some point, your financial planning and forecasting processes grow so complex that it’s difficult for Excel to keep up.

When you’re already battling with constant change you need a system that you can rely on and that can keep up.

Excel is time-consuming

Your business model might not change often but your planning and forecasting must in order to achieve your key strategies in the marketplace. The problem is, you don’t want to change your Excel processes for fear of breaking something that you know works. Instead, you try and maintain your current formulae with multiple plans and forecasts in circulation.

This includes managing many different spreadsheets and trying to keep a tight control of all the forecast templates circulating.

You don’t want incorrect reports or data to be created or duplicated. This means that one or two people in finance usually end up holding all control of the Excel spreadsheets, working overtime to input the data themselves.

Time-consuming tasks mean there’s no time to re-forecast

Keeping a tight control of your Excel processes means that by the time you’ve done the plan and forecast, the figures are already out of date.

You’ll be asked to run some new numbers quickly, which match the changing market conditions. To do that, you’ll have to go through the whole time-consuming process again, which just isn’t feasible.

Running a rolling forecast seems like a pipe-dream.

The accuracy of your ‘what-if’ scenarios become skewed

If you want to reassess your forecast accurately, you’ll want to take the latest forecast report and change the original key assumptions and drivers that impact your ‘what-if’ model. If you can’t do this in time, you have to take a high-level overview of the data and risk making assumptions that aren’t as accurate as you’d like them to be.

When your planning and forecasting gets to this level, it’s important to look at alternative solutions that can improve your forecasting process.

They are out there.

You just need a system that is agile enough to adapt to. The time it takes to change your BP&F processes will still take less time than keeping up this way of working with Excel.

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