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Thoughts on leveraging G/L for budgeting (departmental, location, etc.)

We (an international media firm) currently utilize our general ledger (the only function of an ERP system we use) to tag all transactions with a department, location, etc. in order to pivot information that is fed into excel models for budgeting/forecasting purposes. Being a high-growth company, these parameters are constantly in flux, requiring changes not only within the G/L system, but all systems feeding in. Much of this work falls on the accounting department, extending time to hard close each month. I do realize that there are planning tools out there our FP&A team can likely utilize that are easily integrated with our G/L, including the one the ERP offers. My question, however, is do most FP&A departments truly track based off of feeds from accounting? I feel as though contracts can be analyzed from legal, credit card spend analyzed by person, etc., in order to ease the burden placed on accounting.


Topic Expert
Alan Hart
Title: Consultant
Company: Pacific Shine Group
(Consultant, Pacific Shine Group) |

This will depend on how the organization’s hierarchy is set up. FP&A should track based on what it is fed from accounting so it is important for accounting to properly code their transactions. With a properly segmented chart of accounts and all revenue and expense items properly coded to the right segments it should be fairly straight forward to pull data from the G/L into the planning, budgeting and analytics software. You have to make sure that the reporting hierarchy in the budgeting software matches the actual chart of accounts in your G/L.

The new generation of budgeting software will even allow you to seamlessly interface to the G/L so as soon as an accounting period is closed, your actual accounting data will be available to do analytics on. With a matching budget data format, FP&A will quickly be able to see any variances from budget and depending on which G/L software you use even to drill down (back) into the actual G/L transactions to be able to investigate any variances and their root causes.

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