Financial planning is the process of calculating how much money your firm will need in the future and how it compares to its rivals. Saving money on the move is possible even if you don’t have a precise financial plan in place. It’s conceivable, though, that this strategy isn’t the most successful one available.
A financial plan provides you with a clear view of your income and expenditures, which may enable you to make more informed financial choices. With enough money saved up, you won’t have to worry about paying your bills, making investments for the future, or giving yourself and your family a special treat on a special occasion. Keeping track of your funds while still allowing you to unwind is made possible via financial planning.
Developing financial policies for the acquisition, investment, and administration of an organization’s money is the process that utilizes the organization’s money. A financial plan can’t be created if you don’t know where your money is going and when it is going to get there. Maintaining a record of your transactions, including the money that comes in and goes out, can help you determine how much you need to save and invest each month, as well as where you may cut expenditures a little or a lot to save and invest more money. If your prices fluctuate significantly from season to season, it is preferable to go through the whole year, adding up all of your expenses in each area and dividing by 12 to get an average monthly estimate of your spending. So you won’t underestimate or overestimate your expenses.
Numerous firms suffer from these types of flaws due to out-of-date budgeting methods that are out of sync with the actual execution of the strategy. A lack of understanding of the most crucial duties, resources, and indications plagues finance departments all too often. On the other hand, Budgeting and planning have evolved in tandem with the development of the financial department. Driver-based budgeting (DBB), a budgeting and planning technique that emphasizes the link between firm activities and financial predictions, is becoming more popular. Identifying the important business drivers that impact financial performance helps DBB improve departmental openness by increasing departmental transparency. Finance teams must work closely with business leaders to identify and analyze the critical aspects that influence a company’s performance.
The NetSuite Driver-Based Budgeting enables you to get more work done in less time, thereby enhancing your productivity by several folds. With the services of Folio3, which is a certified NetSuite partner, you can integrate the NetSuite Driver-Based Budgeting into your financial operations and improve the efficiency and accuracy of finance-related tasks.
What’s “driving” Driver-Based Budgeting?
Driver Based Budgeting (DBB) is a budgeting approach that connects actual resources and activities to budgetary data. The process begins with the sales team putting together a spending plan. Products, volumes, and pricing that they anticipate to attain during the following time must be included. They’ll also have to think about how sales will be made and the laws that will govern the many routes of marketing they choose to use. The company can easily predict how activity affects sales and how price hikes or reductions affect it. However, it also disseminates very precise information to the remainder of the company. The sales input is locked after the sales department has finished this action, and the operations department must complete its budget.
After that, operations will make decisions on how to allocate resources based on the sales estimate. These criteria will compute the resources needed to achieve the budget, both personnel and equipment. It’s time to finish this task so the operations budget can be locked in and logistics contribute. This process continues until all departments have submitted their budgets, and the result is a corporate model that connects physical activity to expenditures.
We all know that conventional budgeting and planning methods need to be updated. Traditional Budgeting and planning are difficult and time-consuming, but it fails when decision-makers are confronted with erroneous or missing data. It is because changes in the corporate environment may soon make plans outmoded and even useless. These issues are causing financial institutions to reassess how they budget and plan. Driver-based Budgeting is becoming more popular as a result. Instead of using a standard top-down strategy, DBB focuses on the most important business drivers from the top down. These important drivers serve as a central point of information for executives, allowing them to make faster and more informed choices.
Benefits of Driver Based Budgeting
A holistic planning and budgeting system that offers management, cooperation, and visibility into driving insights is required by organizations looking to use DBB.
- CFOs can focus their attention on the most important data to their company when using a driver-based strategy. The numbers themselves become more dependable as a single source of truth as a result of excluding superfluous information in this manner.
- Finance teams can make timely revisions to plans and disseminate new results regularly. Because driver-based planning allows finance departments to assess the consequences of both internal and external variables more quickly, they reap the benefits of driver-based planning. Based on this information, financing may make modifications and share the outcomes with budget stakeholders in real-time.
- Organizations that have information silos may miss out on opportunities or make poor financial decisions as a result. DBB identifies the major drivers for each of the organization’s critical business processes and organizes them in a centralized location for easy reference. When finance takes on the role of a genuine business partner, stakeholders are more involved in improving the firm’s performance.
- When budgets and goals are intricate, corporate stakeholders will want even more complicated data to make informed decisions. Financial management is unable to keep track of the incoming and departing cash flow for each budget item due to time restrictions in the department. Because it focuses on a limited number of variables, the adoption of driver-based Budgeting simplifies the process of acquiring data. Collaboration between finance and department heads is required to fully understand the driver-based financial relationships.
With NetSuite Planning and Budgeting, you can increase your financial management and evaluation capabilities by employing driver-based income statements, balance sheets, and cash flow planning, as well as more detailed revenue and expenditure modelling. NetSuite Planning and Budgeting makes it simple to sync your transactional data and chart of accounts with other NetSuite applications like Budgeting, forecasting, and reporting, eliminating the need to use spreadsheets and manually update several places. This system, which uses a single end-to-end solution, facilitates the collaboration, control, and visibility necessary to manage the whole budgeting process successfully. All you’ve got to do is get in touch with Folio3 and let certified NetSuite partners take care of the customization, integration, and implementation of NetSuite Planning and Budgeting for you.
