Integrated Financial Planning
An important lever for the company's success
Professional controlling with robust, integrated and flexible corporate planning is an important lever for corporate success. The legislature demands the same with an early warning system according to the Corporate Stabilization and Restructuring Act (StaRUG). The practice often looks different.
Do you still use Excel or are you already planning?
As companies and their challenges grow, controlling with Excel becomes a stumbling block. Collecting data takes too long, manual work steps produce errors and simulations or scenarios are difficult to implement. Planning serves as a central guide in this environment. 5 success factors of business planning ensure that well-founded management decisions can be made:
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Driver based – Mapping the business model and value drivers Integrated financial planning offers the opportunity to precisely map the business model and its value drivers. Unlike Excel, where this is often time-consuming and error-prone, the integrated solution enables automated and accurate capture of these essential aspects.
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Integrated – Interlinking of the income statement, balance sheet and cash flow statement The interlinking of the profit and loss statement (P&L), balance sheet and cash flow statement is essential for comprehensive corporate planning. Integrated financial planning tools ensure these elements come together seamlessly, providing a holistic view of the company's financial situation - an aspect that is often neglected in Excel due to manual data entry and missing links.
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Scenario capable – Modeling different scenarios The dynamic business environment requires the ability to model different scenarios. In contrast to Excel, where this is often tedious, integrated financial planning enables efficient modeling of different future scenarios. This makes strategic planning easier and enables companies to react flexibly to changes in their environment.
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Period exact – Planning on a monthly basis to enable consistent reporting. The ability to plan on a monthly basis is crucial for accurate and consistent reporting. Built-in financial planning tools provide the flexibility to plan financial data at a granular level, which is often challenging in Excel due to limitations and manual limitations. This enables detailed analysis and timely reporting.
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Documented – Traceable documentation of the planning premises to identify deviations. Integrated financial planning enables traceable documentation of the planning premises, including assumptions and parameters. In contrast to Excel, where this information is often scattered and difficult to understand, the integrated solution creates transparency. This is crucial to identify deviations, understand the causes and improve the basis for future planning.
Overall, integrated financial planning offers a contemporary and efficient alternative to Excel that meets the growing needs of companies and creates a solid basis for sound management decisions.
Staus Quo - Controlling potential in medium-sized companies
Often, only the profit and loss account (P&L) is considered in isolation in medium-sized companies. In terms of planning, often only a one-year earnings plan (based on the annual financial statements of the previous year) is generated; if available at all, a liquidity preview is created separately. Balance sheet planning is only rudimentary. Such an approach often leads to incorrect measures and statements, especially in crisis situations.
Despite high levels of dissatisfaction, Excel persists as the primary planning tool, although professional planning and budgeting software is available. Controllers often use several tools in parallel, which unnecessarily increases the complexity of planning. Simulations are often not carried out. The planning process often offers potential for improvement in controlling.
Earnings and liquidity planning in the project business
In the project business, every order is different, series effects rarely occur, and planning is therefore a very special challenge. The cost planning is based on the own performance. As a starting point, the project progress (actual) is to be determined and updated in the planning (forecast). The respective characteristics of a project - such as B. order value, man-days, material input, delivery and duration etc. - can be determined and taken into account individually. Furthermore, a sales plan must be derived from the acceptance dates, with payment conditions and down payments being taken into account. In order to additionally enable a loss-free valuation, the values forecast for the passage of time (commitment) must be compared with the preliminary calculation (budget) in parallel. Finally, the determined cash flows are to be transferred to corporate planning.
In practice, individual plans that have not been coordinated are often found in companies. Project management knows very well when a project is postponed, but controlling can often not or only insufficiently transfer this information into corporate planning. Requirements for flexibility in planning and change management are particularly difficult.
Advantages of an integrated corporate planning
Appropriate integrated corporate planning, on the other hand, depicts the income statement, balance sheet and liquidity calculation as a closed system in which all parts interlock. Interactions between the sub-plans, especially for liquidity planning, are shown automatically. With the help of quick alternative calculations and scenarios for unforeseen events, it is possible to react directly to changed framework conditions. Key figure systems immediately show the effects on the target criteria income and liquidity.
Real-time reporting based on reliable integrated planning usually improves the rating.
Do not hesitate to contact me. External support from an experienced interim manager strengthens trust in the decision-making basis with third parties.
13 weeks liquidity planning on a weekly basis
13 weeks is regarded as an important period in the context of the solvency test, as in various judgments insolvency has been defined in such a way that it occurs when a company is unable to meet 10 percent or more of its due liabilities over a period of 3 weeks. If the managing director can - with a probability bordering on certainty - remedy the liquidity gap within 3 weeks, this is simply referred to as a delay in payment. Although this is also worrying, it is not a compelling reason to file for insolvency due to inability to pay.
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However, a 3-week plan does not provide sufficient information on the further development of liquidity. A rolling, detailed liquidity planning over 13 weeks has proven to be more sensible. This period is usually easy to plan due to open items and allows countermeasures to be taken in the event of any expected gaps.
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For a meaningful liquidity analysis, which should be very close to reality, is necessary:
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1. starting point - financial status as at the balance sheet date:
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Bank balances
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Open item lists for creditors and debtors
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Individual listing of other receivables and liabilities
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Breakdown of provisions
2. development - financial planning over time:
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Planning data for the future weeks / business concept with integrated planning
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Sales planning, data on sales orders and supplier orders with payment conditions
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Personnel and cost planning
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Investment, financing and repayment planning
As a result, liquidity bottlenecks - as an important part of the early warning system - can be quickly and effectively identified and eliminated.