“The budget is rebuilt three times before the three statements agree, and the forecast is never compared with what happened.”

Sales send a volume file, operations a cost file, and finance types both into a model that must also produce a balance sheet and a cash flow. By the time it all agrees, the plan it started from has changed.

What usually goes wrong

  • The budget starts from last year plus a percentage, and the plan sales and operations agreed is somewhere else
  • Revenue, cost of goods and stock are typed in from other people's files, so every change to the plan means another round
  • The P&L, balance sheet and cash flow sit in separate models, and the round ends when they finally agree
  • Cost-centre budgets come back by email, and nobody can say which version was approved
  • The forecast moves every month, and nobody can show whether it was volume, price, cost or overheads
  • Nobody knows when cash will be tightest until that month arrives

It suits every company, and groups with several companies and currencies. It goes furthest where the S&OP plan is built too, because the budget then starts from the signed plan.

How the software answers it

  1. Start from the signed plan. Revenue and cost of goods come from the S&OP plan, priced through each customer's terms; stock from the supply plan; receivables and payables from payment terms. A budget built from a plan can't be locked until that plan is signed.
  2. Each owner plans their own lines. Operating costs by cost centre, people position by position, capital projects with their business case. Owners submit, and finance approves.
  3. Statements that agree. The P&L, balance sheet and cash flow are assembled from the parts. The budget can't be locked until the balance sheet balances and the cash reconciles, and sign-off runs from planner to CEO.
  4. Know where the year will land. A rolling eighteen-month forecast with actuals blended in, the walk from budget to landing, the lowest point of cash and when it comes, and the next thirteen weeks of cash week by week.
  5. Test what has to be true. Downside, base and upside side by side, the assumption that moves profit most, and the volume or price move that reaches a target profit.

Every figure can be traced to the lines behind it. The P&L, balance sheet and cash flow sit on one screen, and any line opens up to show why it moved.

Two worked examples on illustrative figures: a budget that starts from the signed S&OP plan, and where the year will land

What we build for it

Examples from software we have already built:

  • Targets per KPI and profit centre
  • Forecast accuracy measured every month
  • A KPI scorecard, a report builder, report books and management commentary
  • Board reporting, for example a monthly pack in PowerPoint or PDF

All the sample screens

Screens

“How far is the budget from our targets, figure by figure, and from last year and the long-range plan?” Illustrative data.
“Which parts of the budget are ready, which assumption moves profit most, and what price rise would reach the profit we want?” Illustrative data.
“What does each position cost, month by month, and does the headcount stay within its cap?” Illustrative data.
“Which cost centres are over plan, over forecast or over last year, and by how much?” Illustrative data.
“Who has submitted and approved each part of the budget, and who signs next?” Illustrative data.
“Does the assembled budget reach its targets, and do the balance sheet and cash flow tie before anyone signs?” Illustrative data.
“How does next year's budget compare with this year, line by line, and why did each line move?” Illustrative data.
“Where is cash tightest over the next thirteen weeks, and does any week fall below the minimum we must hold?” Illustrative data.
“Do the ledger and the sales data agree, account by account, before anyone reviews a number?” Illustrative data.

Where to start

It starts with a paid pilot, usually the rolling forecast for one company on your own ledger, then a build at a fixed fee and an annual subscription.

Prices How an engagement runs

Write to us

Tell us your business need, or ask for a worked example on your figures — we want to hear it.

Or email support@mistlight.eu

Executive overview screen, on illustrative data

What changed against last year, and where did the growth and the drag come from? — Illustrative data.