The Income Statement and its associated summary lines (Revenue, Gross Margin, Operating Expenditure and EBIT) are the high-level output of budgeting and forecasting for most companies. It makes sense that investment gears towards adopting a driver-based model and improving the accuracy of budgets and forecasts around key P&L line items which drive sales targets, remuneration and fixed and variable costs.

Companies are actively planning around the P&L, and how to distribute it across the enterprise in the most optimal scenario that drives responsibility for targets and management of business performance. The budgeting and forecasting of the balance sheet, and cash is crucial to this planning process, as well as the business variable of cash in particular needs to be well managed and comprehensively understood. This is an especially pertinent point for fast-growing companies that have access to limited funding before they achieve a break-even point. The economic growth modelled in the Income Statement is only achievable if there are enough long-term sources of funding and a sustainable cash balance. Managing and understanding a cash balance over the medium term is especially vital and is frequently considered a top priority for companies when installing new finance systems.

In terms of finance systems, in the current competitive market, an integrated Annual Budgeting solution is a growing necessity. An integrated Annual Budgeting solution is one that connects together all areas of financials with ease of access, efficiency and greater insight for all users involved. MODLR has a demonstration of the ease and power of such a solution in this video.

An integrated Financial Planning solution interconnects sets of inputs and assumptions driven by each end-user, financial assumptions are automatically placed onto the balance, and P&L sheets and creates an up-to-date forecast and budget for cash. Furthermore, a larger range of assumptions, inputs and transactions are connected in the solution, including but not limited to:

• General Balance Sheet adjustments and their effects on respective balance changes month-over-month.
• Budgeting for individual line items such as deprecation, and how it may affect expenses.
• Data modelling of revenue and how it affects Accounts Receivable.
• Purchases of new assets, and its impact on the cash balance, alongside retained earnings and P&L.
• The relationship between accounts receivable and cash based on forecasted and historical cash collection.

MODLR's Integrated Financial Planning Solution

MODLR's finance system is structured to support an integrated Financial Planning solution, alongside other key benefits that will provide your company with a competitive edge:

• Rapid scenario planning - MODLR is able to quickly provide accurate and comprehensive scenario runs parallel to each other to give finance teams the results of different assumptions and adjustments to budgets and forecasts.
• Configuration of account inter-relationships and assumptions by end-users to reach the desired model.
• User-friendly and intuitive interface, with data visualisation and dashboard customisation options.
• Real-time calculations and updates of results that allows users to capitalise on agile decision making, immediately and never miss an opportunity.
• Scalability- MODLR models can support the most complex modelling needs without hurting performance and scale to extreme volumes of data.

Learn more about MODLR's planning and budgeting solutions by clicking here.