Your financial plans are the basis for every business decision your company makes. So when those plans don’t match up with reality, you must figure out what the budget variance is, where the miss came from, and what drove that variance. For many FP&A teams, that’s easier said than done.
You put a lot of work into your financial planning. The budget variance analysis is meant to figure out why your actual vs budget results don't match up. By understanding the difference you can gain insights into how your business is running while improving your future planning efforts.
However, the devil is often in the transactional details, which can take time for business managers to collect and deliver to finance. The finance team will then have questions about those transactions, which takes even more time to answer. Before you know it, it’s the end of the month again, and the whole process starts over from scratch with all new numbers to crunch, understand, and explain.
In a company that employs a spreadsheet-driven static planning process, a finance team can spend days just trying to get all the spreadsheets they need to start their variance analysis.
With static planning, finance teams:
With an active planning process, all your data is automatically collected in one place at the level of transactional detail needed to investigate and understand any variance in budget vs actuals.
An active planning approach to variance analysis helps you with:
With Workday Adaptive Planning, you can easily identify budget variances, understand the story the variance is telling you, and then update your budget to reflect the reality of your business. This allows you to quickly course-correct to improve efficiency and performance. Rely on Workday Adaptive Planning to get more out of every part of the variance analysis process, including:
Integrate your financial and non-financial data to quickly determine what is behind the budget vs. actuals variance, such as a missed sale, revenue being recognized in a different month than you were planning on, poor customer satisfaction scores, or high employee turnover creating a slowdown in production.
Powerful reporting tools make it easy to collect data and produce the variance report, while sophisticated data visualization tools help non-finance team members understand the trends behind the numbers.
Application-wide drill-through and audit capabilities let both the finance team and business managers dig down into the numbers and better understand the budget vs. actual variance.
Instead of just reporting the narrative, finance teams will have the time and ability to be a strategic partner who can advise the leadership team on the correct course of action.