IDU | Budgeting Forecasting and Reporting Solutions

Thursday, 7 November 2019

Free the accountants!


Accountant with abacus

The “bean counter” trope is long past due for retirement, but what’s the alternative? Kevin Phillips argues it’s time for accountants to embrace their inner sage. 

 


We’ve all heard all the cracks about accountants: we’re boring, we’re annoyingly obsessed with tiny details, we’re bean counters. With our tedious controls and processes we get in the way of more interesting people doing more interesting things.  We’re necessary, like flossing and medical checks are necessary, but few people look forward to meetings with their accountants. 


There are occasional attempts to break the stereotype and make accountancy look thrilling. But they tend to veer into overcompensation: CIMA once sponsored a website called extreme-accounting.com, which featured photographs of accountants doing extreme sports while wearing their office suits. But on the whole, the world needs reckless accountants a lot less than it needs boring accountants. Reckless accounting, after all, is what gave us Enron and a raft of other corporate scandals. The way out of the bean counter’s cage is not to become daredevils (which is highly unlikely to work in any case, since it doesn’t exactly come naturally to many of us) but to step into our role as advisors and mentors.


There is real demand for this role: I’ve lost count of the number of business owners, senior managers and other decision makers who’ve told me they long for more than just monthly financial statements from their accountants and finance departments. They need to know not just what the numbers are, but what they mean. Accountants are the ones best placed to offer this interpretation and advice. Our expertise means we can read things in ways lay people just can’t – if you’ve ever marvelled at how a doctor can read an ultrasound scan or an architect can read a plan, then you know how people feel watching us read balance sheets. What seems to us, after years of practice, like a banal everyday activity can look something like wizardry to the uninitiated. 


One of the things that’s been preventing accountants and financial managers from embracing their role as guide and mentor is the sheer volume of more mundane work to be done. The numbers do, after all, need to be crunched. Software, automated processes and AI are rapidly taking over this routine work, though, and we should be glad of it. The less time we spend on the nuts-and-bolts work, the more time we have to think: to consider, analyse and interpret what all those numbers actually mean. 


What might that look like? It might mean spending time coaching that one cost centre manager who just hasn’t got a clue; it might mean identifying problems and weak areas in the business and finding ways to make them better; it might mean scanning for trends that nobody else has spotted yet; it might mean deeper conversations with the leadership team.


Whatever this more ambitious role looks like, it will make much better use of our financial expertise, which is an expensive but often scandalously under-utilised resource. 

Tuesday, 29 October 2019

IDU a leader in the G2 Crowd Fall 2019 Report


Leader High Performer Customer Favourite

IDU has been named a Leader in the Budgeting and Reporting category and a High Performer in the Corporate Performance Management Categories of the G2 Crowd Fall 2019 Report. 

G2 Crowd is one of the world’s leading business solution review platforms, which leverages more than 330,000 user reviews to drive informed purchase decisions.  

IDU has received this accolade after having been recognised by G2 Crowd in four previous reports.   

Our clients voted us tops in terms of “ease of doing business” and “quality of support”. This is a testament to the knowledgeable and dedicated team at IDU. On average other corporate performance management software vendors score 8.6 out of 10 for customer support. IDU scored a 9.1.  

"Customer satisfaction like this comes from having a great product and the right team. The IDU team is highly experienced and listens to customer needs, providing knowledgeable support and services." - Kevin Phillips, CEO of IDU  

It is client reviews like this one that have contributed to us receiving this recognition from G2 Crowd.  

 “The team at IDU have a good business and finance understanding and spend time understanding the specifics of your organization to deliver a solution that is fit for purpose.” – Clive S 

To read the full list of reviews please visit the IDU page on G2 Crowd.  

Read more about IDU or to schedule a demo of our software visit our website at www.idusoft.com.

  

About G2 Crowd

G2 Crowd, the world’s leading business solution review platform, leverages more than 330,000 user reviews to drive better purchasing decisions. Business professionals, buyers, investors, and analysts use the site to compare and select the best software and services based on peer reviews and synthesized social data. Every month, nearly one million people visit G2 Crowd’s site to gain unique insights. G2 Crowd aims to bring authenticity and transparency to the business marketplace. For more information, go to G2Crowd.com.

Tuesday, 15 October 2019

Remove drama from budget cycles

Image result for take the drama out of budgeting
Taking the drama out of budget cycles


Nobody has ever written an opera about organisational budget cycles – but given the amount of human drama they generate, perhaps someone should. The typical budget process is a grim and drawn-out cycle of power games, nagging, resistance, resentment, dread, despair and wasted effort. And all of it, in keeping with the best traditions of high drama, is entirely avoidable.

It begins innocently enough, with our heroes in the finance department preparing spreadsheet templates and sending them out for completion by cost centre managers; and yet the seeds of conflict are already sown, because the spreadsheet is a marvelous tool, but a poor messenger. It is not designed to facilitate the complex and sensitive negotiations that are the real substance of a budget process. Our heroes have an inkling of this and try to compensate with elaborate design; but they can always only respond to the problems that surfaced last year, which inevitably causes a whole new set of problems.

Meanwhile the cost centre managers, on the front lines and grumbling about their generals, do their best to fill in the numbers based on their best estimate of what the future holds. The process is stressful because few of them have much financial training and the spreadsheets can be intimidating, and so in many cases the task falls to the bottom of the priority list until the nagging finally pushes it into the category of ‘urgent’.

As the returned spreadsheets accumulate back in the finance department and people try to compile all the information into a single coherent picture, it becomes clear that there are errors. Our heroes, now growing frustrated and impatient, send them back out again with requests for clarification or changes. Cost centre managers make some corrections, but leave other things unchanged because yes, that is really what they meant. Resentment begins to fester.

After a few rounds of this, with a final deadline looming and everyone at odds, the finance department gives up and makes some changes of its own to bring everything into line. The final budget is not what the cost centre manager asked for, but the reasons for the numbers have got lost; and so they roll their eyes at the waste of time and move on.

Some time later, when told they’re over budget, they retort that they’re exactly on target with what they originally asked for -- if some bean counter decided to override them, that’s not their problem.

And so the circus rolls on: Cost centre managers are disempowered, feel no sense of ownership over their numbers, and resist any attempt to hold them accountable because they are being governed by decisions made over their heads. Instead of being a useful planning and decision-making tool, the budget has become a bureaucratic exercise that feels like a meaningless waste of time.

It really doesn’t have to be this way. In my experience most people really do want to do their jobs well, and they want to be empowered with the knowledge, skills and tools they need to achieve that goal. When it comes to budgets, individual cost centre managers have the best knowledge available in the organisation of what is likely to come their way in the next year – and so they need to be given the leeway to make budget decisions that will be respected. That may involve argument and negotiation, but those are vastly preferable to decisions imposed from outside.

Instead of a vicious cycle of nagging, resistance, disengagement and surrender, it’s possible to build the opposite – a virtuous cycle in which empowerment and clear communication build accountability and a sense of ownership.  It doesn’t make for high drama – but then nobody actually wants to live inside a soap opera.


As published on AccountingWeb  - 24th September 2019

Tuesday, 1 October 2019

Want your staff to be accountable for their numbers?

Empower them.


If you want to track the rise and fall of buzzwords over time, the Google Books Ngram Viewer, which tracks word frequency in a vast number of books published since 1800, is a very useful tool.  It reveals, for example, that while “accountability” has been consistently rising in popularity since 1950, “empowerment” only arrived on the scene in the mid-1970s, enjoyed a rapid rise and then plateaued in the late 1990s.

Empowerment vs accountability
Ngram Viewer tracks word frequency


That’s a pity, because at IDU we believe very strongly that if you really want people in an organisation to have a sense of sharing in its success, you need to empower them with the tools that promotes a sense of ownership for their actions and ultimately some true accountability. One of those tools is accurate, timely financial information. 


It’s especially important to deliver this financial information at the level of individual departments – and to deliver it in a way that makes sense to non-financial managers. A typical line manager in most organisations have no more than basic accounting knowledge, if they have any at all. It’s not reasonable to expect them to be able to read ledgers, income statements or balance sheets in the same way as accountants can – and in fact, that isn’t the information they need. 


What managers need to know about is what’s under their control – what is earned and spent in their departments. And they can be most easily held accountable for their financial performance if they’re able to track it in close to real time. This is easier if they have quick access to just the numbers they need, in a format that’s easy to understand and interact with. 


If line managers are empowered to propose their own revenue and spending budgets, then manage and adjust those budgets in real time, they’re empowered to respond quickly and effectively to changing conditions, both within the organisation and in the marketplace.  How much of our travel budget have we spent? Can we afford that high-profile trainer the engineering team has asked for? Who’s pushing the limits on their expenses a little too hard? Are we on track to meeting our revenue targets? With good financial management systems, getting answers to questions like this should be as simple as checking a social media feed. 


A number of things can happen as a result. First, it’s possible to spot and respond to anomalies in time: What’s behind an unexpected spike in sales of a product you weren’t promoting, and is there an opportunity to seize? Why have several clients placed smaller orders than usual? Do we have a problem? When you can ask the “why” questions early and get answers, you have more chance to take the right action. 


Second, it becomes harder to avoid, evade, delay, escape, stall, deny and otherwise hide from reality. If the numbers are there in front of you every day, you can’t be surprised by them; and if they’re equally visible to your own manager and whoever’s managing them, you have an incentive to take care of them. 


Finally, having user-friendly financial analysis and planning systems in place saves time. If managers can add comments and explain variances when they need to request a budget update, for example, the finance department is able to make a quick decision instead of having to delay while they wait for more information and explanations. 


So if you’re concerned about staff who don’t seem to be taking ownership of their own performance – the first thing to do is make sure they have the information they need to make that ownership real.




Thursday, 19 September 2019

Accountancy as heroism

accountant is the super hero

The financial health of South Africa’s cities and towns is worse than ever before, with only 18 out of 257 municipalities getting clean audit reports for the 2017/18 financial year. Surely it’s long past time to introduce more transparency into our government spending. 


There are plenty of unenviable jobs in South Africa these days (university vice-chancellor, anyone?), but Auditor-General Kimi Makwetu and his team have been having a particularly hard time lately. Municipalities have been brazenly disregarding audit recommendations – the performance of 63 of them actually got worse last year, with only 22 doing better. To make matters worse, Makwetu says his audit teams have experienced people pressuring them to change their findings, questioning their motives, and even outright threats and intimidation. 

Accountancy shouldn’t have to be an heroic profession, so it’s good news that the new Public Audit Act gives the Auditor-General stronger powers to press for further investigations and initiate binding remedial action. But relying on the auditors to catch irregularities years after they’ve happened is much too little, too late. 


Like mould in a damp cellar, dodgy dealings, bad faith and even plain old incompetence thrive in darkness. Transparency and free-flowing information are the light and air a democracy needs if it’s not to start rotting at the foundations – and with today’s technology, there is no excuse for a lack of transparency. 


What does transparency look like? It means real-time access to information that’s easy to understand, even if you’re not a professional accountant. It means being able to dive below the top layer of aggregated numbers, all the way down to individual transactions if necessary. And most of all, it means the people who are responsible for spending money are also held accountable for it. 


Imagine if your local municipality’s accounting systems were open to public scrutiny in real time. Ordinary citizens could see exactly what was being spent on travel, or entertainment, or mystery consultants—and just as important, what was not being spent on upgrading sewerage plants, fuel for refuse collection trucks or maintenance of public roads and housing. And they’d be able to see it within days, not months or years – which means there might be time to stop problems in their tracks, before the money has been siphoned away into offshore bank accounts and properties in Dubai. Best of all, people who know their actions are being watched are less likely to go wrong in the first place. 


None of this is impossible to do right now – it’s not even particularly difficult or expensive, especially compared to the billions we’re continuing to lose to “irregularities”. The technology to achieve all of this already exists and is in use around the world, including in many places right here in South Africa. So is government not making its spending transparent because it can’t – or because it doesn’t want to?


Did you know that South Africa’s national Budget is rated as one of the most transparent in the world? In fact, in 2017 we tied first with New Zealand in the International Budget Partnership’s Open Budget Survey of 102 countries. So we’re getting one side of the equation right. Now it’s time to focus attention on the other side, and get our spending right as well. 

As published in Accountancy SA - September 2019

Tuesday, 3 September 2019

Recession and Resilience

Resilience


There might be a recession coming soon; or it might come later. Economists are notoriously bad at recognising recessions until we’re in one – but we do know, at least, that another one will be along eventually.

Given this certainty, what’s the best way to deal with a looming downturn? For most people, the instinctive response is to prepare as if for disaster: nail up the windows, batten down the hatches, tighten belts or whatever the metaphor of choice might be for stockpiling resources, cutting spending and reducing exposure to risk.

Our instinctual response makes sense in the context of storing food for a long winter, or in anticipation of a famine – but in a more complex world than our ancestors faced, some of these reflexes can be counterproductive, particularly the instinct to stop spending. Deloitte, for example, reports from its latest survey of European CFOs that companies that reinvested more during the last recession, particularly those who were more advanced in the use of ICTs, achieved higher growth rates during the recovery. They attribute this success to thinking ahead and planning to take early advantage of the opportunities that inevitably arrive with a recovery.

Similarly, McKinsey partners writing in the Harvard Business Review say that during the next recession they expect companies to invest in, and rely increasingly on, digital tools to improve quality, simplify operations and boost productivity.

A recession, then, is an opportunity to invest, thoughtfully and strategically, in tools that will boost your organisation’s resilience and agility. Some of the most valuable tools are those that are able to improve communication, transparency and accountability across the company.

For example, depending on their needs and culture, some organisations centralise during times of trouble – others choose to disperse. Whichever choice they make, visibility is key: decision makers need to know what is happening at every level in the organisation, employees need clear direction from their managers and leaders, and teams need to communicate clearly across the organisation. Whatever level of confusion and mismatch we might be able to get away with in good times, we cannot afford it when things get tight. In particular, we need to take full advantage of the combined brains of everyone in the organisation – we need to gather and use all the resources of knowledge, skill, talent, experience and creativity we have.

In some ways this is common sense – but then again, we all know common sense is not all that common, particularly when people are feeling worried or fearful.  One of the most dangerously self-defeating reactions is to start hiding or withholding information, usually in the entirely misguided belief that giving people access to an accurate picture of reality will cause panic or encourage defeatism.

There’s a great example of this in the deservedly acclaimed TV series Chernobyl. In the first episode, local party officials agree on the night of the explosion at the nuclear reactor not to tell the local townspeople what has happened – for their own good. It was nearly two days before the town was evacuated. Other lies, omissions and concealments contributed greatly to human suffering in the wake of the disaster.

Tempting as it might be to tell ourselves that concealment of information was a disease peculiar to Soviet-era Russia, we all know it’s not. Again and again, leaders withhold or soften the truth about problems facing their organisations  – whether out of shame, fear, belief that they can fix it on their own, outright denial or some combination of all of these.

The truth may indeed hurt – but avoiding it always hurts more in the end. Leading people successfully through difficult times requires the courage to share the truth – and to seek, then accept, input from the rest of the organisation.

Only when everyone in an organisation has access to all the information they need can they truly apply themselves to fixing problems, developing new ideas and creating new opportunities. Choosing and using digital tools that facilitate information flows throughout the organisation is essential to building the resilience that’s needed to weather tough times.

So if you find yourself worried about the future, put your instinctive reactions on hold. Pause; reflect; look ahead – and then choose the actions and investments that will strengthen your organisation rather than weakening it.

As published AccountingWeb - 28th August 2019 

Thursday, 22 August 2019

Stuck in spreadsheet hell?

It’s time to upgrade your budgeting and forecasting process

Spreadsheets cause accountant frustration

How long does it take your company to prepare its annual budget – two weeks? Six weeks? Two months? Three months? And on a scale of “walk in the park” to “swim through shark-infested waters”, how stressful is the process?

If your answer is six weeks or longer, we’re betting the process is also stressful and unpleasant. For some human activities, a slower pace means more leisure and time to reflect; budgeting is NOT one of those activities. If a budget takes many weeks or months to complete, it’s not because anybody is taking it easy but more likely because they’re stuck in a nightmarish cycle of data collection hassles, arguments, delays, requests for more information and spreadsheet version conflicts.

The good news is: It doesn’t have to be that way. It’s possible to shorten your budget planning and approval process, in most cases to four weeks or less, while also making it less stressful, more accurate and more useful. The key is ditching those pesky spreadsheets in favour of a single, central information source that makes it easy to find and share accurate information with everyone who needs it.

Don’t get us wrong – spreadsheets are a fabulous tool and serve many small and early-stage businesses well. But at some point in the life of every organisation they begin to outlive their usefulness – and like any other tool unfit for purpose, they can start to cause more problems than they solve. Problems like inaccurate data capture, version conflicts, broken links, and user confusion and misunderstanding.

Here’s what’s possible instead: budget information is held in a single database to which all line managers have the access they need to check their past spending and propose new budgets. The interface is easy to use, so they don’t feel intimidated and overwhelmed by the task and there’s less temptation to procrastinate. The moment their numbers are entered, the finance department and their managers can see them, and query them if needed – right down to the level of individual line items. There are no long email threads with multiple attachments, just a single database with comments and attachments embedded. Each department’s budget proposal is submitted on time, and approval is quick; if the budget isn’t approved, line managers know why and can make alternative proposals.

As a result, departments feel more ownership of their budgets, and empowered to make better financial decisions. If the situation changes, they’re able to update their budgets in real time – and the finance department gets early warning of changes, instead of only finding out months later when actuals are finalised. The finance department is also freed up for more strategic tasks like profitability analysis and proactive planning.

In the end, moving to a dedicated budgeting and financial planning system means each budget planning phase is shorter – but also that budgeting is continuous, making the entire firm more agile and adaptable to changing market conditions.

So if you’re still stuck in spreadsheet hell – you don’t have to be. Have a look at what idu-Concept can offer.