Making Every Digit CountPosted on Jun 1, 2016 12:00:00 AM
For 15+ years our team has been developing multi-year financial forecasts using “rolled up” or summarized data from Annual Financial Reports (AFRs). The new 5Cast platform, which was introduced to the market last year, is driven off of a local government’s general ledger…providing the opportunity to capture “line item” level of detail. By connecting directly to our client’s financial accounting systems, we are now able to get to the lowest level of detail within their chart of accounts. This foundational change is opening up tremendous opportunities for budget analysis and improved forecasting.
During the forecasting process, 5Cast users can model their assumptions at an aggregated level or all the way down to the line item. Clients can also utilize their historical line item data (in tabular or chart form) to guide their forward looking assumptions. The benefits of the additional level of detail in 5Cast opens up great opportunities for data mining historical records, as well as, producing a forecast that can essentially serve as a budget template for the next year.
A government’s ability to maximize the value of this detail is dependent on creating this valuable detail when coding the financial transactions in the general ledger. This gets to the concept of “making every digit count”. Forecast5 clients that use their entire account string to code transactions are finding great benefit when the data is fed into 5Cast. By utilizing lower level detail account dimensions in the coding process such as Department, Program, Location, Goals, etc., these clients are finding valuable insights and operational trends. Some examples include:
• Overtime or extra duty pay by department or location
• Utility costs by fund and location
• Service program trends by goal, detail object, and site
With the ability to slice the data with low levels of detail, users are able to identify significant trends or visualize outlying data points that would be difficult to find in an “unsliced” tabular view. The data shaping technology in 5Cast is providing many CFOs unprecedented control of their financial data and powerful modeling capabilities that are directly impacting budget decisions.
As previously stated though, the opportunity to maximize the benefit of this analytic technology is directly correlated to the coding strategy employed by the local government. Developing a coding paradigm that utilizes the full account code string unlocks the opportunity to disaggregate and shape the data in a manner that ultimately facilitates the analytic process…and benefits the organization.
If you have not been using all the digits in your account string…now is a great time to start. You can create better history for the organization on the fly. The extra effort invested in the front end of the process will produce better analysis and budgeting opportunities, as well as, a superior multi-year forecast.
For more information on budget analysis and forecasting, call Josh Rader at 630.955.7602 or email him at firstname.lastname@example.org.