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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.

Answers

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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