Solid financial planning starts with solid forecasting. However, financial forecasting can be something of a minefield. Believe it or not, making educated predictions about a business’ future performance can’t always be produced from a package software solution. Every organisation is unique and there isn’t a person or cloud-based solution that can speak exactly to the kind of flexibility and scalability that a Microsoft Excel template system can.
Thanks to a modern world of technology, businesses expect to be able to find an automated solution for nearly every operational process. But, the reality is that there isn’t always a suitable one in every instance, as the required solutions are unique to the entity.
For example, the computing requirements and input required to prepare a forecast for a cruise business vs a home-cooked meal delivery service couldn’t be more different and uniquely complex. The former may perform financial forecasting in Excel using the linear regression method, while the latter implements something simpler that allows for minor percentage adjustments if needed.
How does each of those businesses go about finding their best solution out of a box?
Cloud-based software applications tend to follow broad-based industry needs to produce broad-based solutions for organizations who fit under a specific umbrella. This is understandable, as by casting a wider net, the vendors can appeal to a larger market.
Unfortunately, it doesn’t do much to solve the forecasting requirements of SME’s who require flexible solutions that can provide stakeholders with the accurate insights they need to make business decisions for the future.
It’s for this reason that financial departments rely so heavily on the application described as one of the most important computer programs in workplaces around the world – Microsoft Excel.
If you are looking for a business case to use a Microsoft Excel template system for financial forecasting instead of outsourcing unnecessary technology, here it is.
Rather than sign up for awkward software that is unnecessarily complex for the purposes of being able to capture a wide range of scenarios, you can use al template system designed by MS Excel professionals. The benefit being that it can be used nearly instantly, is free of the features you don’t need, and can evolve and be improved over time.
As building templates requires the business user to evaluate its reporting needs from the ground up, this can provide a solid base on which to plan and develop future, more complex, automation processes on.
Simple stand-alone modules can be developed and then eventually linked or incorporated into other more robust forecasting models.
For example, this payroll budgeter tool provides the familiarity of Excel to outline one of the biggest costs a company has to budget for annually with great extensibility and insights. On top of that, it is scalable and can be used as a base model to provide accurate calculations for more complex projections in external custom-built models.
Another benefit of using an MS Excel template system as opposed to cloud-based applications for financial forecasting is its simple once-off cost structure.
Developers often don’t consider initiating a financial modelling project until there is an assurance of a few thousand pounds for development. Also, this does not even take into account the customer support contracts and potential annual fees which can be added onto the existing product. Furthermore, any minor necessary alterations will incur further costs.
After all is said and done, not only will you be paying potentially exorbitant fees in the short and long term for a product that you don’t fully utilise or even need, but you won’t even own the software application.
It can also be a complex situation to get out of if you decide that the system isn’t working for your business. Cloud-based systems typically implement an annual or even monthly contract, which makes it all the more difficult and expensive to terminate.
The answer is, instead of spending thousands from the budget for an annual software licence, purchase your MS Excel templates at a known set price. This initial cost is once-off with no annual licensing fees, meaning you own the automation software outright. All that’s left is to pay for further consulting fees should you need it.
In the long term, this approach more than pays for itself.
Adding a brand new tech stack to the framework usually means that businesses have to spend time and money training employees on how to use the new application software.
However, most employees are familiar with Excel’s basic processes and can use it right away. And, because it’s part of the MS Office Suite, they already have it installed onto their work machine, cutting down the time to productivity greatly.
It’s also a ubiquitous tool used within the majority of business financial tech stacks, which means that the programming can be easily assessed by finance heads to understand the underlying processes. Furthermore, if the person isn’t familiar with a particular aspect of VBA, then information on it is readily available online.
The reason why MS Excel is such an excellent tool for performing complex predictions lies in its flexible nature and relatively quick development cycle. As VBA is a programming language which can be fairly easily learnt, VBA macros are easy to develop and maintain.
The programming language hardly requires external experts to develop and maintain the macros automating the financial model. VBA can be understood and even debugged by the professionals who use the system.
By comparison, specialist software using other programming languages can only be debugged or maintained by IT experts, which can result in expensive licensing fees or call-out costs.
For SMEs looking for a flexible, robust, and cost-effective solution to assist with financial forecasting, a Microsoft Excel template system provides compelling advantages over cloud-based applications.
If you would like to know more about setting up a forecasting template system for your business, contact us by leaving your details here.