See Where You’re Headed with Proactive Management of the Annual BudgetPosted on Feb 13, 2018 9:00:00 AM
You can’t get where you need to go when driving a car by only looking in the rearview mirror. The same is true for your annual budget. If you’re spending the majority of your time reviewing transactions and preparing reports about what just happened, it’s hard to see the twists and turns in the road ahead.
To stay on course, it’s important to be able to anticipate budget variances and flexibly adapt to unexpected events that no one could have predicted. For most finance teams, the manual process required to pull data into spreadsheets and analyze the results is overly time-consuming. That’s because financial systems geared for school districts are great for recording transactions, but not well equipped to support analysis of current and historical data.
To proactively manage the annual K-12 budget, administrators need to be able to do more than just review line items. To improve the accuracy of forward-looking assumptions, I’m a big proponent of the concept of operational forecasting. It’s a simple process that provides both a “nowcast” and a forecast for increased financial insight into budget performance.
Good data drives good decisions
The unexpected is the one thing financial managers can count on to pop up during the year. Operational forecasting takes advantage of data about what happened in previous years to identify trends that are likely to impact the current fiscal year’s budget.
Armed with that info and a clear accounting of current income and expenditures, a school district’s finance team is better able to quickly – and proactively – adapt as needed to make good decisions.
Automate the process
Operational forecasting sounds complicated given the limitations of legacy financial systems. But, it doesn’t need to be.
With 5Cast™ Plus, a budget planning solution from Forecast5 Analytics, the process is automated. Monthly transactions are easily uploaded from existing financial systems to 5Cast Plus. The module analyzes data and produces an immediate overview of historical trends, short-term projections and a view of the current financial health.
Armed with the information from 5Cast Plus, school districts can easily evaluate what’s happening at the end of each month, compare to the previous month or year, and project the budget to the end of the fiscal year. It’s all done in a matter of minutes versus the hours it takes to create manual reports.
The analysis produced by 5Cast Plus enables the finance team to more clearly see where they are headed for the rest of the fiscal year. The module does all the work produce an immediate analysis of historical trends, short-term projections and a view of current financial health.
School districts can track progress in implementing the annual budget by evaluating the current month’s performance (MTD), the year-to-date budget (YTD) with comparisons of what was budgeted versus what actually occurred. They can also compare prior years’ actuals to budget and incorporate learnings from trend analysis to make adjustments as needed to the remainder of the fiscal year.
Operational forecasting powered by 5Cast Plus makes sure school districts are focused on the road ahead and prepared to proactively manage changes to stay on the best path forward.
David joined Forecast5 Analytics in 2014 and is responsible for the product management, development, and outreach of Forecast5’ s quantitative analysis and financial projection engine – 5Cast. He also assists with the management of 5Cast client relationships. Prior to joining Forecast5 Analytics, he worked as a Chief Financial Officer/Treasurer for over 30 years at Township High School District 211, in Palatine, Illinois. During his extensive experience as a CFO, he successfully engaged in the development of several strategic planning projects and long-term capital improvement programs. David received his BA in Business Economics, and has a MA and certification in school business management.