Richard Reinderhoff

Richard Reinderhoff is a CFO/FP&A expert, turned advisor. He has worked for corporations from different continents, at local BU and holding level. His experience in an emerging market has developed him into a strategic finance business partner.

Richard uses his strengths to develop learning management teams, improve capital allocation decision-making, and eliminate misperceptions on strategy. He is a specialist in Zero-Based Budgeting and promotor of FP&A, as the next frontier in finance business partnering.

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Rolling Forecast – Case Study: A Review Of Management

By Richard Reinderhoff, CFO/FP&A Expert and Independent Adviser

A rolling forecast is not only about seeing the future unravel, but a constant evaluation of the management team to see if they are able to adjust their operations on time. Without it, any form of strategic planning becomes useless.

Below you find a real-life case. Step-by-step each question will be briefly discussed. It is about a foreign business unit, which was part of a large European corporation, on the brink of a crisis.

1. What is expected for the year to come?

You want the rolling forecast to have the basics. This means there should be an overview of the budget: Budget (n), where “(n)” is the actual year, next to the actuals of previous years, Year (n-1) and (n-2). 

In this overview, you see that the “year-to-date” numbers by management are optimistic. The plan was approved (sales target 43,0 million), meaning that the executive team knows how the management team will realise this growth scenario, in the last 2 quarters of the year. 

 

2. Will they hit the target?

Next, you have the “year-to-date actuals” forecast. The local management team might want to see month-by-month numbers, to manage the sales force/sales division. As an executive team, you don’t want to start micro-managing a local business (you hired a country manager, remember). That’s why the budget consists of YTD numbers.

The first month was better than budget, pushing the YE (December) up to 43,4 million. Yet, the following months the business turned sour. What has been happening?

3. What is management expecting, short term?

You want to know if the management team is focussed and if the quality of the forecast is adequate, to achieve the quarterly results.

You see repeatedly the first month being overly optimistic forecasted by the management team: YTD 6,2 expected in February, YTD 5,3 realised; YTD 8,9 expected in March, YTD 7,1 realised; YTD 11,1 expected in April, YTD 10,1 realised. Is this just a bad quarter and what are their plans to recover lost sales? Or are they ‘wishing’ things will turn out for the best?

4. What is management expecting, long term?

A strategist looks just a little bit further. With a 13 months(!) rolling forecast you can get the next month projected twice! Near the monthly close, the management team has to forecast coming month revenues, based on their order book or some kind of sales projection. In addition, the same people should forecast the same coming month, but 1 year ahead. “Business-as-usual” or is there a something on the horizon?

YTD Februari, March and April of the actual year are the same as the YTD months of the forecasted year, 6,2, 8,9 and 11,1 million. The management team is thinking “business-as-usual”. 

(Note: The YTD Actual of January (3,4), changed in the forecasted year to 2,5 million. This was an unwitting mistake, yet explained because actual YTD sales had dropped 0,9 million in February (from 6,2 to 5,3 million). This kind of planning should actually always occur, but some executives don’t want to see reality, that quickly.)

5. How will the business evolve?

Any trend should appear here, the forecasted 12 months (FC12). It shows the expectations the management team has about the evolution of the industry and/or the commercial impact of operational problems, eg. out-of-stock, recall, strikes. It presents the foundation for the next business plan, hence no surprises anymore.

Each month the business is loosing a million or more in sales and the local management team isn’t seeing any improvement, thus not acting. This confirms that  the management team is ‘wishing’ for a better future. Is the business loosing market share? Or is there another crisis? 

6. If action is required, can management do it?

The rolling forecast gives the executive team the opportunity to discuss with the management team what is happening and to decide on the best way forward. They can coach the management team through strategic choices and financial decision making.

In this case, there was another crisis and the executive team intervened. The country manager was effectively ousted and the thirty-something finance director and sales manager were put in charge. The executive team (approving their monthly purchase orders, of course) accepted the turnaround plan writing overnight by the finance director, and their re-forecast of May to YTD (Decembre) 21,2, down from 39,7 million.

7. Is the problem being solved?

The decisions of the executive team and the actions of the management team will appear in the rolling forecast. Again, short term predictions, YE (December) stability, and solid long term outlook (FC12). 

The YTD monthly sales now are higher than forecasted, several months in a row. The YE improved too. Also the FC12 in August seemed more realistic (22,7, from 16,9 million), supported with 1 year ahead forecasts justifiably being lower. This gave the executive team the option to sell the business.

 
Lessons learned: Look outside the reporting deck!

The local finance director foresaw the downturn. He had been looking at the local accounting numbers, without all the reporting contingencies and reserves. In addition, he saw that inventory of their (worldwide) suppliers was growing fast, according to Bloomberg. This indicated a general slowdown in the segment. Fueled with ‘bad’ management, it was a crisis in the making. The turnaround plan focussed on expanding into another segment: fewer volume sales, yet solid profits.

Above were the key-questions related to Sales. You should also have a rolling forecast of the Operational Profit (OP). This allows the executive team to monitor what management is doing to improve operations (from COGS to overhead). Depending on the industry, add an Order book rolling forecast. To complete the monthly forecast executive deck, add a quarterly overview. In this way, you can have OP/Sales (%), which is relevant to all publicly held companies.

Even with the best forecast at hand, always look outside the reporting deck. Each step generates different questions. Talk to the management team. Remember, a rolling forecast means continually reviewing the (non-)actions of the management team and adjust operations in accordance with the business focus. A rolling forecast is one of the best first steps towards having an agile business culture.

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Strategic Planning is about ‘Talks & Figures’

By Richard Reinderhoff, CFO/FP&A Expert and Independent Adviser

A ‘financial’ strategist is a strategist first, and a financial second. For decades financials have been applying solutions to become a strategic business partner for the C-suite, from financial engineering and tax planning, to centralising (global) operations and deep analytics today. To avoid drilling deeper and still find nothing, reverse engineering the strategic role of the financial will show another route to be of value and increase the yield on IRR or profits with double digits… 

Reality check

If the aim of CFO’s and FD’s is to improve the decision-making process by the C-suite, meaning add value to the business, accounting and compliance aren't helping this quest. In fact, if you read the report by American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA), Joining the Dots: Decision Making for a New Era, you’ll be in shock:

  • 80% of respondents admit that their organisation used the flawed information to make a strategic decision at least once in the last three years. One-third (32%) of respondents say big data has made things worse, not better…”
  • “72% of companies have had at least one strategic initiative fail in the last three years because of delays in decision-making, while 42% say they have lost competitive advantage because they have been slower to make decisions than more agile competitors.”

It is all about information, yet more details or more of the same data will give you the same answers, only in more detail or at a higher spend (Capex). The trick is to reverse the direction the financial is looking: from ‘stargazing into a black hole’ to ‘storytelling based on facts’. For this to happen, the strategy of the business needs to be placed into the ‘accounting’ systems. 

A simplified example will be used to show, how this ‘street smart’ solution was encountered (step 1) and how it is set-up (step 2).

Step 1. Talk to Sales & Operations

A strategy is often a group of plans, where the numbers disappear in PowerPoint presentations, Excel sheets or BI software. Many financials are hooked by their screens, yet the story in the plans is ‘lost in translation’. 

For example, what does the following overview tell you?

Not much, it just shows you the composition of spending, not the strategic intent. As a board member, you might even be tempted to reduce Consultancy fees and Temps, as part of a company-wide ‘savings initiative’ as a response to market pressures.

The first step to increasing your understanding is to talk to Sales & Operations and ask what drives and blocks their business. For the same example, the “Accounts” have been decomposed and reshuffled into the “Business Drivers”, it shows how each business is planning to be developed. 

When the result is lagging, which question will you ask now?

Of course, as a board member, you will ask where and why performance is lagging. This is how the quality of the decision is increased, avoiding ‘one size fits all’ solutions. And normally, it’s the financials that should have provided the CEO, CFO or GM with the right answer.

  • In a real case, 14 companies worldwide were managed based on these kinds of expense reports, which built up into Return On Capital Employed (ROCE) and Value Added ratios. This was also enough for a local Finance Director to manage the expenses until the business focus changed from selling ‘bulk’ to ‘custom build’. Now, with a highly segmented market approach, a cost management system had to be devised to meet this differentiation and his reporting needs, meaning he had to get involved with Sales & Operations and monitor each segment.

Step 2. Implement Project Accounting

As a financial, you have talked to Sales & Operation (managers, directors, and global VP’s) and they have given you a jointly agreed list of key “business drivers” for each market. This list should match their business plans or strategy. One problem, there are no such descriptions in the Chart of Accounts or as Cost Centres. Here enters project accounting. 

What is a project? Basically, it is a sequential flow of various tasks. Each project task can contain any kind of spending, following the Chart of Accounts, and different ‘Cost Centres’ can book on a project activity, when working (or purchasing) together.

Standard project: 

Within project management, each project task or activity is called a Work-Breakdown-Structure (WBS), with a WBS-description and WBS-number. To transform project accounting into a strategy storyboard, you give each project task a WBS-description of a “business driver”, and have a term which lasts e.g. 20 years or more. Now the strategy is in the accounting system!

Strategy storyboard: 

The only instruction you have to give to the budget owners is that their assistant books each transaction and allocation with one additional code: the WBS-number, which is given by the budget owner and related to one of the business drivers. 

Now that you have the strategy translated into a storyboard in your accounting system and amount are being booked, this is what you get:

  1. The local manager will get a report enabling him/her to tell the strategic story to the regional director.
  2. The regional director can follow the role-out and effectiveness of different strategies across the region, and explain and advise the global VP where and how best to allocate or reduce spend, going forward.
  3. Global VP’s can present a ‘Use-of-Funds’ overview to their CEO, telling the real strategic story on how the money was used by their business (versus strategic intent) and which additional initiatives were taken to improve performance.
  4. The CEO will be able to match the initial detailed ‘Use-of-Funds’ overview (= the strategic plan or Pitchbook) presented to boards and investors, with the quarterly updated ‘Use-of-Funds’ overviews, to defend any change (or not) in business focus and actions are taken on major events impacting the company.
  5. Now boards can constructively participate in discussing and making the strategy work, without the need to just trust the PowerPoint of the CEO or worry about the report of their Audit Committee.

Project accounting has more reporting advantages, e.g. it ‘overwrites’ / no cross-border limits, bookings can be split between different WBS-numbers, and various consolidation hierarchies possible.

  • In another real case, around 8 different Marketing Managers each had their marketing plan translated and linked to business drivers defined by their own regional Marketing Director. The local FP&A specialist applied project accounting to all these plans and reporting needs. As a consequence, finance stopped receiving inquiries from Marketing Directors controlling the spending of their Marketing Manager, and the Marketing Managers could deviate from global ‘reduction initiatives’, securing their prioritised spend and meet or exceed their targets.

How does this increase the yield with double digits? Re-allocation of Capital!

A company using a traditional business planning method will learn quickly. After management sees where the money really went into and noticing they spent less time understanding the numbers, they will start to permanently reduce spend on non-value added activities and fund only the best new opportunities. 

Those companies familiar with Beyond Budgeting, Driver-Based Planning, or (strategic) Zero-Based Budgeting, will immediately see the real advantages:

  • No strategic initiative will be wasted (= effectiveness of capital).
  • The allocation of capital can easily be prioritised and changed in accordance with the business environment (= market leadership).
  • Strategic changes will not be hindered by the planning cycle (= transparency and agility).
  • Changing KPI’s will result in faster solution finding and best-practices (= cost savings).
  • Re-assigning people to value-added activities increases motivation (= retention of talent).
  • Business focus, growth and development will be watched closely by boards (= continuity).
  • M&A must show where the synergy will be (or is) happening (= accountability, goodwill, impairment). 

The increase in returns comes from the effective execution of the strategy and adapting it in accordance with the business environment. By linking the strategy with accounting, and not the other way around(!), project accounting is writing the real success story, every month!

Epilogue: Strategic Planning is about ‘talks & figures’

Independent of the accounting, ERP or BI system installed, using project accounting can turbocharge any financial into a strategic business partner without the need for any significant investment. When FP&A is placed within this bigger picture, the link to strategic planning becomes evident. By translating the strategic intent of the company into business drivers made visible through the ‘use-of-funds’, the execution of the strategy becomes fact-based, transparent and verifiable: ‘talks & figures’. Just think about it, and add real value to your role and your company. 

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FP&A Transformation through Effective Organisational Structure

By Richard Reinderhoff, CFO/FP&A Expert and Independent Adviser

FP&A has an impact on the organisational structure, enhanced by the possibilities of new technologies. Where previously companies are classified as having a centralised, decentralised or matrix structure, the future promises to be less clear, more diverse yet potentially very agile!

On 26 March 2019, the FP&A Trends Group organised the webinar “FP&A Transformation through Effective Organisational Structure”, exploring structure and technology. The webinar was sponsored by Unit4 and I was fortunate to present a very compelling storyline from three great thought leaders:

  • Larysa Melnychuk, CEO at FP&A Trends group and MD at International FP&A Board 
  • Fredrik Hedlund, Senior Vice President, Global Markets CFO at Nielsen 
  • Matthias Thurner, Chief Product Officer & Analytics Visionary at Unit4 

This article is an overview of the webinar.

FP&A Trends & Organisational Structure

The trends presented by Larysa Melnychuk show the equally important challenges companies face today. If FP&A is moving forward to more driver-based planning, analytics (AI/ML) and integrated FP&A, then serious attention should be given to data quality, talent, and outdated technology many companies still use. Traditionally, organisational structures can be classified as centralised, decentralised and matrix structure. 

With each structure having both advantages and disadvantages, the real challenge is on establishing an effective structure for FP&A to evolve. Of these three structures, most companies follow a matrix structure. A quick poll during the webinar confirmed that 47% of the companies can be classified as having a matrix structure.

“FP&A Transformation through Effective Organisational Structure”

Fredrik Hedlund presented his business case on Nielsen, a global company, where he transformed Finance across 100+ countries, and where today FP&A thrives within a centralised structure.

At the start the company had a completely decentralised structure, each country had its own FP&A and finance activities. A new system and IT structure created the opportunity for change. This would include solving complexities, such as multiple legal entities, different languages, statutory accounting, while also being compliant.

Having a vision of the future was essential for everyone, followed by having a good strategy and roadmap to get to that end-state. Fredrik mentioned that 6 months were spent on planning. Starting with a centralised infrastructure the aim was of having FP&A associates close to the business, not in a hub. All associates needed to report directly to one FP&A leader. Only at a later stage, an analytics COE (Centre of Excellence) with data scientists was set-up, leading to the FP&A Operating Model of today. The whole journey took nearly 9 years.

Fredrik explained in detail the drivers which made their solution a success. He highlighted that it was not only about cutting cost, but improving the service level to the business: lower cost and doing the same, and same cost but doing a lot more. The FP&A structure is now able to support the business, by owning the ‘truth’, simplify forecasting, be more accurate, cutting the budgeting process time in half, minimising the time operational and commercial teams spent on planning thus giving more time to run the business. 

Recently, the step was made away from PowerPoint and Excel and only use web-based financials, increasing the efficiency both on the input side and reviewing. Fredrik also explained how a new best practise in one country gets picked by the central team and is then rapidly rolled out across other countries.

A Gartner/CEB case study of Nielsen showed that if business transformation occurs, like restructuring, consolidation or other business unit changes, only 5% of jobs in finance need to be realigned. 

The results, Fredrik mentioned, are that people won’t get caught up in changes happening around them, but continue to be able to do their job. This design proved to work since they have had three major changes in the last three years. The rapid changes happening today isn’t disrupting the finance function, Fredrik explained.

Discussion value creation and finance transformation, Fredrik referred again to the focus being on improving the services and not a fixed cost target. This translates into shareholder value by investing a large part of the gains back into talent, training, and resources to improve the processes. According to Fredrik, the real value is translated into resilience.

Fredrik ended his presentation by showing the 10 transformation lessons learned. He indicated three lessons which stood out for him:

  • Benchmarking to determine “best-in-class”
  • Invest in change management
  • Staff central PMO & fully dedicated core project team with “superstars”

FP&A technology

Next, a quick poll among the attendees showed that only 13% of the companies have FP&A technology in place that provide learning/business insights. 31% have no technology in place and 54% are slowly adapting to collaboration.

“How Technology can Enhance Organisational Structure and FP&A Collaboration”

With the impact of technology on FP&A showed in the previous presentation, Matthias confirmed that technology is one the most important drivers and enablers for having modern FP&A processes and tools within any organisation, being centralised, decentralised or a matrix organisation. 

According to Matthias, new technology is facilitating the organisation in three ways: Collaboration, Enablement, and Self Driving Software.

Collaboration is already happening today and applies to many parts of the organisation. Matthias explains how technology as enabling work and people. The result of innovation here, as Matthias mentioned, is to really collaborate with anybody, anywhere, and anytime.

Matthias explained that enablement is related to processes within software applications inside companies. With practical examples, like travel or hiring a person, he showed how the right steps and rules can be guided, using a digital assistant. For FP&A this translates into asking for information on country revenues versus budget, and a graph, without having to call someone from FP&A. 

Self Driving Software goes even further. According to Mathias, this is intelligent software which takes work away, and not gives you more work. This he elaborated further by added with Software-as-a-Service. In his vision, this creates a new paradigm impacting the organisational culture and structure of ‘our time’.

Matthias extends this vision to crowdsourcing knowledge from outside, which could be especially important for FP&A. As an example, he refers to developing an opinion on what the possible future oil price for the next 12 months, using a group of external experts.

For Matthias Driver-Based Planning really shows the importance of collaboration, next to reflecting and thinking about how these figures came together in the budget. 

Matthias demonstrated a practical case that goes from ‘Defined Logic’ (eg. contract deals) to ‘Assumptions’ (eg. dialogue on future performance). He showed that information on assumptions is being as important as the figure itself. Based on this, the next step is ‘Simulate Impacts’ to grow a deeper understanding of the drivers. For Matthias, FP&A is getting more multi-disciplinary and other departments will have to be involved, organised by FP&A. In the last step ‘Suggest & Explain’, it is the system that produces the report with all necessary information.

New technology, like AI, has an impact on people. Matthias explained this as follows. First, there is the fear of the unknown. Can the result be trusted? Will it take my job? Second, Matthias explains that these fears are the result of AI not explaining the presented results very well. User experience is key to gaining back that trust. And third, AI actually takes over the simple jobs, hence leaving value-adding work to the people.

Finally, Matthias showed where the ‘CFO office’ is at this point (data scientists & AI experts), and where it is headed towards to (eg. embedded AI/ML in standard software/SaaS).

Being ‘ahead of the curve’

In short, Fredrik showed that through a centralised organisation structure Nielsen made the transition into a new and modern ‘CFO office’: Centralize Operations, Distribute the Workforce”.

Matthias, discussed specifically how technology can be applied today, exploring Driver-Based Planning, and presenting the case for new technology to be a major advantage for FP&A: “collaborate with anybody, anywhere, anytime”.

If you want to learn more about the details and examples, offered by Larysa Melnychuk, CEO at FP&A Trends group and MD at International FP&A Board, Fredrik Hedlund, Senior Vice President, Global Markets CFO at Nielsen, or Matthias Thurner, Chief Product Officer & Analytics Visionary at Unit4, you can access the webinar recording here.

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Rolling Forecast: 3 cases towards agility

By Richard Reinderhoff, CFO/FP&A Expert and Independent Adviser

Financial Planning & Analysis (FP&A) is gaining more and more attention from business leaders. Its focus is the future of the business. It uses past and actual (big) data to effectively model or support the decision-making, and can timely impact the business focus. The FP&A professionals who work as Finance Business Partners understand basic accounting and reporting, yet their strength is in being from different ‘walks of life’.

FP&A Trends led by Larysa Melnychuk is promoting FP&A worldwide. Their partners/sponsors, PageExecutive (or here), FP&A/Association for Financial Professionals (or here) and CCH Tagetik (or here) are actively participating during presentations, which is rare but great. It demonstrates their commitment with business leaders to create a pool of knowledge and establish a network of professionals adding value to the business.

In Amsterdam, FP&A Trends and partners/sponsors organised another FP&A Board meeting, the subject: Rolling Forecast. Below is a review of a short presentation I gave at this FP&A Board meeting.

What is the purpose of a Rolling Forecast?

By presenting 3 different cases, you will get an idea of the range of possibilities a Rolling Forecast can have for the business. Since you can do anything with the financial software of today, finding a purpose of having a Rolling Forecast becomes essential for success (= implementation + adding value).

Case 1: Supply Side – Working Capital Management


The first case is about a family business, importing raw material from different countries around the globe and always selling everything they produced. They are a low-cost producer and competition is fierce. With a 24/7 production line, as soon as a machine stops, money is lost.

The Rolling Forecast was developed in 4 steps.

  1. Cash Management. The financial forecast was based on Account Receivables and Account Payables, making it just a treasury tool. Not insignificant, when F/X rates are volatile and inflation is 7%. However, working with a standard sales price and estimated sales discounts wasn’t telling the business story.
  2. Involving the Supply Chain. The finance manager started to involve procurement: lead times of 60 days, rates and dates on L/C and F/X contracts, suppliers ‘cancelling’ purchase orders because they sold the material to a higher bidder (without telling), and strikes and fiscal complexity at ports. Thorough knowledge of these operational risks improved the quality of the financial forecast, moving towards a Rolling Forecast.
  3. Adding the algorithm. With the warehouse being fully stacked (roughly minimum inventory level of 70%, because of unmanaged supply chain risks), an algorithm was developed to start predicting the real material usage. It was ‘discovered’ that when equipment was slowed down, the quality of the material would increase. This created a business opportunity: higher quality of output, although at a higher cost, leads to premium pricing. If inventory is running low, due to supply chain problems, machines wouldn’t have to stop producing. The algorithm and sales network made it possible to reduce the minimum inventory level to roughly 25%. Free cash!
  4. Involving ‘fashion’. Now, with the possibility of premium pricing, dyeing became a strategic ‘fashion’ choice. Premium products are being sold to a different segment, with a different taste in colour.

In the end, a Rolling Forecast of 3 months was updated daily. Having outsourced the dyeing of low-cost products, money was invested in new equipment for dyeing high-quality products. The equipment was placed at one of the preferred dyeing partners. This selected horizontal integration off-set various cost disadvantages (e.g. occupation rate, environmental license, lead time).

Case 2: Start-up – Funding


When the government opened the telecom market, multiple tenders were being developed. A start-up was set up by a foreign corporation. They organised an engineering team to be trained in the latest hardware from the supplier, to develop backbone technology solutions, and ‘helped’ to develop the technical specifications of the tenders (like all competitors did). The installation would be outsourced.

 

A start-up in a tender market has no revenues, only spend. This means either capitalisation through equity or through an (international) inter-company loan. In a turbulent political and economic environment, the latter can be preferred. The choice became more important once tenders were being won.

This start-up was winning most of the tenders. The share price of the corporation increased with each deal won. Cash needs increased rapidly since payments only occurred when specific milestones were achieved. Any delay in client approval at a milestone would result in a fine. Knowing that the profit margins on each tender were low, profit to the start-up (and the supplier) would have to come from services (post-installation) and network/capacity expansion contracts.

In the end, with each tender won, and using the milestones from the project plan, updating the Rolling Forecast of up to 1 year was easy. When the tender market ended, the start-up was sold. This for sure would have secured the IRR established by the corporation. Like most corporations, they weren't in the business of selling products, but selling businesses.

Case 3: Fortune-100 – Management Support

This corporation depended on R&D and M&A. Patents secured client loyalty. Local business units were mainly Marketing & Sales operations, functioning as ‘cash cows’. The command & control culture focused on permanent cost reductions, outsourcing, or the centralisation of functions at HQ. In recent years, several projects of FP&A had failed to capture and involve the local business units, due to being time-consuming and overly complex. In addition, there was no clear added value to spend (a lot of) time on highly detailed FP&A.

The business controller at a local business unit saw there was an information need towards the region. The ‘fear’ of losing information between HQ and local business was being managed through multiple, stand-alone reports. Local marketing managers were spending a lot of time on financial planning and monitoring the actual bookings of spend. Not their task!

 

The solution resulted in a single report, generating an automated SKU planning, based on current product mix%, an automated monthly, quarterly and year-to-date P&L’s, and many more, all combined into one Excel file. However, only the first sheet was ‘interactive’. It contained (among others) the following:

  • Sales: Last Year; Budget; quarterly reported Estimate of Actual Year; the monthly Actuals.
  • Outlook: Rolling Forecast of Actual Year, based on an algorithm from finance; Rolling Forecast (*) of Actual Year, based on the expectation of the marketing manager; short-term Risks & Opportunities (*), which included actions, impact on sales, spend and operating profit.
  • Forecast: Long-term Risks & Opportunities (*), which included actions, impact on sales, spend and operating profit; multiple year sales forecast; the extended Rolling Forecast (*) of the Next Year.

(*) Discussed and adjusted monthly.

Here, the Rolling Forecast starts as a 24-month forecast. Each month the projection would be one month less. A risk or opportunity impacting Next Year figures, would automatically be processed in the Rolling Forecast, updating the business plan for the coming year. Transparency and no surprises!

In the end, setting up the Rolling Forecast and centralising the reporting through one Excel sheet (the other sheets are automated), proved to be the most efficient and effective solution. For each product line, the marketing manager would be spending only 1 or 2 hours per month on business planning and FP&A with finance. It involved an algorithm and human input, quantitative and qualitative information, backwards and forward-looking data, relevant ratio's, and detailed (SKU) and meta (P&L) data.

Lessons Learned

With a Rolling Forecast, business focus gets constantly being reviewed by management and effective action can be taken immediately. As such, a Rolling Forecast drives business change. When considering a Rolling Forecast:

 

Thanks, and enjoy the future!

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Author's Articles

May 24, 2019

FP&A has an impact on the organisational structure, enhanced by the possibilities of new technologies. Where previously companies are classified as having a centralised, decentralised or matrix structure, the future promises to be less clear, more diverse yet potentially very agile!

February 5, 2019

A rolling forecast is not only about seeing the future unravel, but a constant evaluation of the management team to see if they are able to adjust their operations on time. Without it, any form of strategic planning becomes useless. Below you find a real-life case. Step-by-step each question will be briefly discussed. It is about a foreign business unit, which was part of a large European corporation, on the brink of a crisis.

February 1, 2018

When FP&A is placed within this bigger picture, the link to strategic planning becomes evident. By translating the strategic intent of the company into business drivers made visible through the ‘use-of-funds’, the execution of the strategy becomes fact-based, transparent and verifiable: ‘talks & figures’. Just think about it, and add real value to your role and your company. 

September 22, 2017

Financial Planning & Analysis (FP&A) is gaining more and more attention from business leaders. Its focus is the future of the business. The FP&A professionals who work as Finance Business Partners understand basic accounting and reporting, yet their strength is in being from different ‘walks of life’.