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Budgeting

Businesses use different methods for their annual or periodic budget processes. Some budget incrementally and others budget from a zero-base. Some like to capture their monthly estimates, while others prefer to calculate their estimates based on certain parameters, indicators or trends.

Whatever method you use, Finnivo® can help you manage your process effectively.

In Finnivo®, creating, tracking and updating budgets becomes easy.

Here is how the process works in Finnivo®:

First, the reporting formats and report templates are finalised. This means including all line items, calculations and input sections (content or commentary) for cost centre owners to complete.

The report packs are then distributed or made available to the owners of your various cost centres.

For incremental budgeting the starting point is always to import the year-to-date actuals up to that point.

When doing the following year’s budget, users typically begin with a view of the final results and closing balances as at the end of the current year. This needs to be forecasted and shown as the previous year’s results in the next year’s budget. This means that the year-to-date actuals are added to the forecast results for the remaining months of the current financial year – which can be calculated in three different ways:

  1. Users can capture their estimates for the remainder months (typically called a runway),
  2. Formulas can calculate the remainder based on certain parameters, averaging or seasonal or historical trends, or
  3. Users can add the original budget amounts for the remainder months to the actuals up to the month.

Cost centres can then complete their estimations for the next financial year and years thereafter, if required. Again, these estimates can either be manually captured by users or calculated based on set parameters, trends or market and industry indicators.

Next, the budgets of all the various cost centres are collated, aggregated and then consolidated by eliminating inter-company transactions and balances.

The budget reports, for individual cost centres or at group level, then need to be published into various forms to the business managers and executives for analysis and board approval.

In most cases, there will be multiple budgets submitted for approval. Often budgets are not accepted on the first round and changes need to be made, or you’re required to maintain different versions of the budgets, based on different scenarios, for comparison. Both options are easily managed in Finnivo.

Once budgets are approved and published, you can import the final budget data back into your accounting software.

XBRL

Starting 1 July 2018, various qualifying / selected Companies will be required to submit their financial and mandatory information to the Companies and Intellectual Properties Commission (“CIPC”) in a new electronic format. This will ultimately become a mandatory requirement for all Companies.

The new reporting format will require Companies to upload an iXBRL digital file to the CIPC portal (which will ultimately replace the process of uploading PDF report formats). Various other regulatory bodies are also currently investing in infrastructure to allow for the upload of the iXBRL files for submission of required Company information.