Financial services planning amidst market uncertainty

Between forecasts, stress tests and what-if scenarios, accounting and bookkeeping demands increase during a crisis. Planning and budgeting for the future are hard enough in good times. It’s even harder during times of crisis or upheaval. Major change is coming every week or every day in the current environment.

In an attempt to plan ahead, firms try to forecast how revenue will be affected by the pandemic over the next six to 18 months. Planning and budgeting are difficult in the current roller coaster environment. It hasn’t helped that economic forecasts vary wildly. Third-quarter growth forecasts for the US ran the gamut from 70% quarter over quarter growth to 2%.

But though challenging, budgeting and planning are more important than ever as they’re key to adapting and pivoting. Understandably, accounting and bookkeeping demands increase during market uncertainty. Ideally, you will want to stress test financial plans for various scenarios to understand how you’ll fare and then take steps to minimize that impact by lowering operating requirements or other means. Forecasts and plans also should also be revised more frequently as policies and other market conditions change. All that can be exceedingly laborious if using spreadsheets or disparate instances of QuickBooks within siloed departments and processes.

Spreadsheets holding you back?

At many mid-sized financial services firms, Excel is the hardworking backbone for budgeting and planning solutions. While it works, it’s not without difficulties. Spreadsheets are time-consuming and prone to error. It usually involves downloading CSVs, cutting and pasting, updating formulas, and links. It’s also difficult to do collaborative work as version control can become an issue.

Add in the unpredictability of the current crisis and increasing reliance on more frequently updated data, using spreadsheets to plan and budget can start to feel unmanageable. One way to speed up the process is with a cloud-based financial management solution.

Many finance leaders have embraced software tools to help them forecast for new scenarios more efficiently, perform “what if” analyses, import actuals to compare to budgets and collaborate with key stakeholders within the firm without sharing sensitive information. These tools are within your grasp with Sage Intacct’s budgeting and planning capabilities.

Ramp up forecasting ability

Data analysis is becoming more and more integral to financial decision making. But to get to the analysis, financial services firms need robust number-crunching capabilities. That’s unlikely using spreadsheets.

Halstatt, a family office specializing in real estate, private equity, venture capital, and other alternative investments, was hampered by its previous spreadsheet system. It would take a staff of seven 80 to 100 hours to create consolidated reports and a board book, and another 80 to 100 hours to conduct asset allocation reporting. Because the process was so time-consuming and complex, valuation reporting was done only once a year.

By updating its accounting system, the firm not only saves time and money, but also gains real-time visibility and insight into its financial outlook. Valuation reporting can be done once a quarter instead of once a year because it only takes a few hours. The firm also set up financial dashboards that allow stakeholders to track key investment metrics in real time. The boost in efficiency ultimately enabled Halstatt to bolster its investment strategy.

“It allows us to make decisions in hours versus days or weeks so we don’t miss out on any investment opportunities,” said Amanda Goebel, Halstatt’s senior accountant.

In another instance, a progressive real estate firm based in New York City and San Francisco had spreadsheets with tabs for each market, numbering 10 to 12 in all. Manual entry of actuals used to take three days using spreadsheets. But with Sage Intacct’s budgeting and planning tools, it can now be done in minutes.

Ramping up that ability to make calculations faster allows the company to run forecasts for various what-if scenarios, as well as keep a rolling forecast number. In the current market environment, being able to forecast various scenarios and their impact on business, revenue, cash, and P&L helps the company make vital decisions to better navigate today’s, volatile environment.

Stay nimble

During times of uncertainty your instincts may tell you to hunker down, suspend any new investments and not embark on a new course of action until the crisis is over. Yet, according to a study from the Harvard Business Review, investing during a crisis can help companies pull ahead of the competition. The study found that companies that make some proactive moves such as investing in research, plants, machinery or marketing during a crisis have a 76% higher chance of pulling ahead of the competition when the crisis is over than just cost-cutting alone.

Many financial services firms are facing significant disruption in the current business climate. That makes it more important than ever to be able to quickly gauge the shifting environment and adjust accordingly. Companies need to evaluate short-term liquidity and assess risks to respond quickly. In order to do that, firms need to stress-test various scenarios to understand the potential impact on financials in the short- and long-term. If the impact is significant, then finance leaders are empowered to make data-driven decisions with confidence, rather than relying on gut instinct.

When budgeting and planning tools are integrated with financials, you can capture deeper insights and forecasts more quickly. This integration gives you the ability to forecast and prepare for unexpected scenarios in good times and in times of crisis.

For more information, about how budgeting and planning tools can help you, check out this eBook: 8 Signs Your Software Company Has Outgrown Excel For Budgeting and Planning.

8 Signs you have outgrown Excel for budgeting and planning


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