Transcript
Hello and welcome to another Bedford Consulting spotlight video. In this video, we’re looking at an overview of integrated financial statements within our plan. If you require an in-depth demonstration tailored to your specific requirements, then please get in touch. The contact details will be available at the end.
For those of you who are new to Anaplan, it is a cloud-based connected planning platform. It is used to model everything from financial plans, workforce requirements, sales and operations, marketing projects, and more. Importantly, and the focus of this video is the fact that Anaplan can connect people and data instantly. A change made downstream, perhaps by a cost centre owner, can immediately be reflected through the model and made available as outputs for reporting and analysis. In this case, the income statement, balance sheet, and cash flow. This allows you to run a more efficient, evolved planning process without any need for manual aggregation and validation, as well as helping you explore company performance under a variety of different assumptions and scenarios.
On this dashboard, I’ve combined all three financial statements to give us a full integrated view. Like all dashboards in Anaplan, it’s been built once but can be sliced across the business hierarchies we choose to include in the model. In this case, across different locations and across different versions. We’ll look more at these later. Both of these will be filtered automatically based on individual user security settings, so they’ll only see the data that relates to them.
From this summary, I can drill into more detailed dashboards, such as expanding the income statement to be by month and to a low level of granularity, as well as being able to navigate across the model to the detailed input dashboards that drive the forecast.
You can see here that this model contains detailed revenue planning across our lines of business, opex planning split between different categories, as well as detailed personnel and fixed asset costs. Looking at the model map that Anaplan creates for you as you build a model, you can see how changes made to any of these values flow automatically through to the income statement and then, with added assumptions such as working capital drivers, also update the balance sheet and the cash flow.
So, let’s actually change some numbers and see how these integrated statements work. I’m going to look at this from two perspectives. Firstly, as part of a collaborative planning process where different people are feeding into a forecast, and then secondly, as part of a higher-level what-if scenario.
For the collaborative process, I’m going to look at an example of a dashboard that perhaps a sales manager would complete as part of a forecast. Here, I have the products that we sell in the sectors that I am responsible for. I can make changes to prices and margins that have been based on historical data, as well as by changing our units sold by period, all for a particular region. In my case, the UK.
If I flip back to our integrated statement report, you can see that we currently have a full-year revenue of 577 million with a net income of 135 million. But if, as the sales manager for the UK, I decide to update my April units from 25,000 way up to 250,000 and then return to my integrated income statement, you can immediately see the impact on the graph as well as seeing updates to revenue and net income, moving from 135 million to 149.
So, we can see how that one change we made to April’s unit sold has updated down the income statement to net income, as well as flowing through into the cash flow to update the 149 in the cash flow report, as well as updating various accounts in the balance sheet, such as the accounts receivable, accounts payable, inventory, etc.
If you picture multiple sales managers across all locations all feeding into Anaplan at the same time, you can imagine the time savings versus doing this kind of collaborative process in multiple Excel workbooks or in siloed systems.
Another example in this collaborative forecast would be a cost centre manager updating some of their overheads. For example, if I look at the landing dashboard for the manager of the United Kingdom South cost centre, I can see each dashboard they need to complete as well as a status as part of a workflow.
If I open their salaries and benefits dashboard, I can see all of the existing staff and make changes to attributes like their role, their salary, their variable compensation, etc., as well as adding in new hires and setting leave dates for others.
Similar to before, any change I make, such as changing one employee’s variable compensation, will flow down to the total employee compensation, as well as through into the income statement, to net income, into the cash flow, and into the balance sheet.
A simple way to see this is to view the scenarios side by side. Here, I have my income statement, but now pivoted to show my different scenarios. The option to slice now across time and across locations, as before. As you can see, all the changes we’ve made so far to our scenario A have been reflected here with the variance between that and the original forecast.
I’m now going to use scenario B to show how easy it is to do a quick what-if scenario more centrally. You see here on the right-hand pane, I can include any useful supporting information or assumptions. For example, if I pop out the revenue panel here, I can see the same units forecast that I used on the sales manager’s template, now though as part of this scenario.
I want to make a top-down change. Instead, first, if I click on scenario B, you can see my bottom grid now relates to scenario B, and I can swap from an individual product up to my all sectors level, as well as being able to key into my total year. If I change the full-year value for all sectors from just over three million to, let’s say, 3.5 million, you can see this has been automatically allocated into each forecast month and to each individual product based on the split of the existing forecast.
So each product’s share and any seasonality is maintained. You can see at the top here how that one change has flowed through the income statement. It’s updated revenue, cost of sales, as well as driver-based costs, such as admin expenses, and allocated costs, such as research and development.
If I now jump to the equivalent dashboard for the balance sheet, you can see how those same changes have already rippled through to the balance sheet. I’ve now also included drivers on my right-hand side, such as working capital and write-offs. If I change the inventory turnover, for example, from five turns to, let’s say, six, you can see the update to inventory.
Perhaps if I change my days payable outstanding from 50 days down to 45, again, you can instantly see the impact that these changes have on the scenario. So very quick to do what-if driver-based or assumption-based scenarios.
Finally, if I return to my original dashboard, you can see all those updates rippled through. I can see the whole dashboard for scenario B or scenario A or my original forecast. The changes aren’t just specific to the dashboard that you make them on; they ripple through the entire model.
Okay, so hopefully you’ve enjoyed this Bedford Consulting spotlight video on integrated financial statements. If you are interested in a more detailed demonstration, please contact us. We’ll be happy to help. [Music]
