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Why you should swap business budgeting and forecasting spreadsheets for the cloud

Access to up-to-date, accurate data is absolutely critical for start-ups and fast-growing companies to set the direction of travel and identify opportunities and threats

Business planning, budgeting and forecasting provide a roadmap for any company and give its employees clear directions on how to reach the intended destination.

These processes also identify key financial and performance milestones along the way. This is particularly critical for start-ups and fast-growing businesses in setting the direction of travel.

However, the reality in the midst of all the commercial focus of starting and growing a business is that the planning, budgeting and forecasting process is often a time-consuming and mundane administrative process that leads to an annual budget based on outdated assumptions.

Budgeting and forecasting spreadsheets vulnerable to manual errors

With little time left for analysis and strategy development, the budget and forecast are effectively filed away and forgotten about until next year. The danger is that it becomes just a tick in the box that does little to actually help set that direction of travel and identify new growth opportunities or highlight threats and risks.

Much of the blame here rests with the continued reliance on the humble spreadsheet, still the primary budgeting and forecasting tool of choice for many businesses and finance teams. The flaw in this approach is that it’s easy for manual errors to creep in and it can take weeks or months to pull together information from across a collection of unconnected spreadsheets and disjointed workflows. It’s also an approach that cannot scale as a startup grows and expands into new markets.

Read more: Closing the books: How your start-up can avoid period-end chaos

The cloud-based solution

The challenge for many small-to-mid-size start-ups has been that costly and complex enterprise-class planning and budgeting software has typically been out of reach. And alternative ‘point’ solutions aimed at smaller businesses often lack the functionality and ‘interoperability' with core financial systems.

Those barriers have now been removed by cloud-based ERP systems. The cloud opens up enterprise-class financial tools to start-ups and smaller organisations on a hosted, pay-as-you-go basis. It lowers total cost of ownership, enables rapid deployment, provides flexibility to scale up or down and helps start-ups to stay agile and responsive in a fast-changing business environment.

The very latest information is available and accessible in real time to everyone who needs it across the company, regardless of location, time zone or device they are using. Any changes made to plans, budgets or targets are instantly reflected in reports and dashboards and the business can respond in a more timely and agile way to new opportunities and threats.

With this solid foundation, start-ups and fast-growing companies can then embrace more sophisticated planning and budgeting approaches. For example, a cloud-based ERP system provides flexible modelling tools to enable companies to test different ‘what-if’ scenarios and the best response to each of them.

The availability of centralised and real-time cloud-based financial data also supports a more continuous approach to planning and budgeting through rolling forecasts, where the finance team is always planning into the future and revisiting budget assumptions on a monthly or quarterly basis.

For start-ups and their backers this is vital to building a more realistic vision of the future and it gives the company the opportunity to re-evaluate the next steps in the execution of their plan for the business as business and economic conditions change and new trends emerge.

Another benefit is that employees get a better understanding of the direction in which the organisation should be heading and the way that their own efforts align with the wider goals of the business.

With these tools a finance team has the opportunity to play a far more active role in business decision-making, helping a high-growth organisation to move forwards with confidence, even in periods of uncertainty.

Oracle NetSuite’s cloud business software suite is trusted by more than 40,000 organisations. Find out more about NetSuite here