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Finance Tracker Spreadsheet

Finance Tracker Spreadsheet – Monitoring and control actions
We will see several monitoring and control actions that can complement each other:

1. Follow-up of the monthly closing
One of the first basic tasks of a Department of Management Control is to participate in the monthly closing with a work of supervision and analysis that allow a good quality of it.

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Throughout the closing process, the Management Control is reviewing different control points and, if necessary, detecting errors or needs of estimates that are communicated accounting for them to perform. Thus, Management Control is reviewing the quality of the process and the step, “understanding” the closure, which allows it after a better analysis of it.

 

2. Budgetary follow-up
The budget of the economic year divided, usually, in twelve months. However, there are sectors where this is not done, being the most representative case of retail consumption. There is nothing to see a large surface compared two months, one with four week fines and another with five. Or one month of April with Easter and another without it. In this sector, the fiscal year divides into 53 weekly periods.

In the case of the division in twelve months, in the first days of each month the previous month is “closed”. Analytical accounting and other information systems (internal and external) are collected, all the actual data, in the same detail as the budget was made.

The information that is usually collected is the following:

1. Actual sales (in units and unit prices in local currency and in foreign currency) by Segment, Channel and Product.
2. Margins and discounts for products, areas, customers, etc.
3. Unitary Manufacturing Costs for the product, with the productivity of each of the Manufacturing lines.
4. Unit costs of each of the Production sections, with the performance of each of them, for each type of consumption.
5. Unitary costs of consumption.
6. Cost of Structure, by nature and destination (Cost Center).
7. Amortizations.
8. Non-operating expenses.
9. Input and output flows of investment projects, with the degree of progress, if they are in progress.
10. Financial income and expenses, with real investment and investment rates.
With all this information, the real economic data / financial model of the month is constructed, which is resumed in the Operational Accounts and Balances and compares with the budget of the period and accumulated to identify the main deviations.

3. Analysis of deviations

As soon as the data for the end of the period (usually the month) is available, a document is usually drawn up describing, in as much detail as possible, the budgeted values ​​for each of the variables (both physical and economic), Real Data Of the period and the deviations produced. This work is performed both for the period completed and for the accumulated year to date (year to date).

This document can be in different formats, by means of a Control Panel or a “deviations notebook”.

They are also performed in up-to-date summaries in such a way that a person in charge of several cost centers has a summary of the area of ​​his responsibility. Likewise, those responsible for the Business Units, if they exist, will have a report with the information summarized at their level.

Finally, it elaborates an executive summary for the Top Management, with the most significant data and deviations. This summary may be the scorecard (which is developed below), or a specific document that is treated as an annex to the scorecard.

The executive summary of deviations is a critical document that must be done with great intelligence. It should not be a huge document filled with detail information. On the contrary, it must be done with a TOP-TO-DOWN methodology, in which after the Balance Sheet and the Profit and Loss Account, only deviations with an important impact will be highlighted, and only descends, in those chapters in which the detail Is transcendent. The summary, in addition must “enlighten” trends, that is, sections with results that are acceptable, but whose tendency to worsen can turn them into critics.

4. Feedback to the organization
This is the most valuable activity of the Management Control function. The success of a Management by objectives depends both on the quality of the goals set and on the ability to analyze what has been done and to take the relevant decisions to bring that reality closer to the objectives.

With the “diversion notebooks” carried out in the previous phase, “Diversion Committees” are convened, in which the heads of the Cost Centers or Centers and those responsible for Management Control analyze the causes of the deviations produced and take the Decisions needed to correct the problem. Operational decisions (or affecting only the scope of each Deviation Committee) are documented (with action details, responsibility and commitment date) and are implemented.

If the decision is of greater rank or affects different areas, it is elevated to the Management Committee, which studies the most relevant aspects of all Committees of deviations and assumes the decisions of their level of responsibility.

Along these lines and as we pointed out at the beginning of this chapter, the Company must ensure that the evolution of its results, as well as the policies and programs undertaken are consistent and are well aligned with the Strategic Plan. If this is not the case, variations should be introduced, either in short-term management or in the strategy itself, if reality reveals some of the bases or assumptions of the aforementioned Strategic Plan.

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