Driver-based planning is a type of management that zeros in on a company's key value drivers and key business drivers. It helps create budgeting and business plans based on these factors. The goal of this type of planning is to center on the factors that are important to fueling success. Mathematical models can be created to project business. Driver-based planning is helpful for finance executives when they are planning long-range strategic strategies. Examples of this include sales volumes in units, market share, number of shipments, and market size and growth. The driver-based planning approach can be also used to create detailed financial budgeting for the next fiscal year in addition to creating financial forecasts to keep the budget current. Instead of budgeting every little thing, the focus is on creating fluid forecasts. Things such as the costs for computers, employees, and office supplies can be separated and calculated. The driver-based approach gives you the details that you need.
The Benefits of Driver-Based Planning
Without a doubt, the driver-based planning approach gives companies more accurate information. Companies can also run predictive analytics reports to see what factors are moving the company in different directions. It helps companies identify areas of vulnerability. The data integrity of the driver-based approach is high. Companies can trust the figures. And the models created not only outline what's happening but why it's happening.
The higher frequency with the driver-based approach also makes it easier for companies to plan and forecast. That's because it is centered on the company's success.
The driver-based approach also allows the companies to make faster decisions. There is much more visibility with this approach. Companies can easily identify what is causing financial results. As a result, companies can respond quicker.
Companies get better business support with this approach for budgeting and an inverted pyramid can be created for detailed analysis.
The driver-based approach gives companies a better ability to plan around key drivers. It allows companies to understand and change the critical elements that have a strong impact on financial performance. When it comes to business, timing is always critical.
Using the driver-based approach, companies attain greater efficiency in planning, reporting, and financial performance. This approach also gets everybody on the same page. Marketing departments, distribution departments, financial departments, and manufacturing departments can all see the impact of their performance.
The driver-based approach also allows companies to create a rolling forecast. It helps reduce the time it takes to perform traditional annual planning. This is essential for today's companies.
Lastly, this approach changes things up for the better. The conversation changes to operations. Companies can identify changes that need to be made. In addition, companies can see new opportunities. With more opportunities comes more revenue.
Turn to NetSuite Planning and Budgeting to implement the driver-based approach in your company. NetSuite allows you to analyze and manage your company finances in a very deep and detailed manner. Use it for cash flow planning, spreadsheets, financial forecasts, financial planning, reports, and income statements. You can easily sync all of your data with NetSuite. NetSuite gives you all of the tools needed for better visibility, control, and financial planning. It's your one-stop solution to improve the bottom line. Start the new year with AccountingDepartment.com and NetSuite.