How the Budget announcement may impact financial planning
On Monday 29 October, UK Chancellor Philip Hammond is set to announce the Autumn Budget, the last one before the UK officially leaves the EU. For many businesses across the country, the Budget announcement will require various adaptations to financial planning for the upcoming quarters. This might prove difficult for those that are not yet set up for continuous planning, and therefore some organisations may find it difficult to quickly respond and adjust forecasts in light of unexpected changes.
While most economists and pundits have not been expecting any drastic policy changes to be presented by the Chancellor, any modern business must be prepared for a scenario in which there are. Whether it be changes in business rates, the level of income at which income tax kicks in becoming frozen, or a generally gloomy outlook on the UK economy as it heads towards Brexit next year, those in charge of financial analysis and planning will need to pay attention to how it might impact finances both short- and long-term. As important, any announcements that are beneficial for businesses may present opportunities that can only be seized through the swift updating of business models and the ability to quickly review multiple scenarios.
With business data nearly doubling every year, and many companies still using outdated planning systems, the gap between what planning systems offer and what businesses need continues to widen. Rather than contributing to organisational agility, traditional ways of doing planning, reporting, and analytics have been static, manual, siloed, and error-prone. Finance professionals have had to live with an array of limitations on model scale and flexibility, slower analytics, and offline storage of older, less-used calculations. Legacy planning platforms limit the number of scenarios that can be analysed, place constraints pn dimensionally, offer insufficient amounts of cubes for efficient reporting and analysis, and place restrictions on how detailed calculations can be. Simply put, these planning tools are not suited for modern businesses.
What is needed is a limitless approach to planning that can be done with real-time data, quickly. For example, optimising calculations by only recalculating the dependent changes, compared to the traditional way of recalculating most or all of the whole model again. This allows for responsible businesses to evaluate financial plans on a continuous basis, even in light of the most minor changes in economic outlook, without it becoming a costly and burdensome endeavour.
What Chancellor Hammond will announce, and especially the economic repercussions of his announcement, remains to be seen. It is clear, however, that businesses must pay attention and focus on ensuring that the planning and forecasting processes they have in place are both nimble and robust, so that they can make the most of whatever twists and turns lie ahead.