Mastering financial forecasting in procurement: a guide to budget management

What are the benefits of financial forecasting?

Managing financial forecasting offers several advantages, including:

• Enhanced Planning: Allowing for better resource allocation and scheduling, ensuring that projects run smoothly without unexpected costs.
• Risk Management: Financial risks are mitigated by predicting potential financial shortfalls or surpluses.
• Informed Decision-Making: Providing the ability to make data-driven decisions about materials, cost-cutting measures, and other financial strategies.
• Increased Efficiency: Proper forecasting helps streamline operations, reducing the time and effort needed to manage finances manually.

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What are the current challenges with financial forecasting?

Financial forecasting within material procurement is especially important but currently faces several challenges:

• Time-Consuming Processes: Forecasting budgets for materials and additional expenses is labor-intensive, with time-consuming manual data entry.
• Communication Gaps: There can be a disconnect between the field and the office. This leads to accounting teams being unaware of purchases until invoices are received and processed, leading to delays in financial visibility.
• Manual Tracking Difficulties: Keeping up with the numerous transactions at the line-item level is only possible with an integrated system.

SubBase addresses these challenges by providing real-time visibility into financial transactions and budget management, ensuring that field and office teams are aligned while syncing data to your accounting system.

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How does SubBase help with financial forecasting?

SubBase offers a suite of features designed to streamline financial forecasting:

• Real-Time Invoicing Reports: SubBase allows users to run reports on invoicing, showing current invoices and pending amounts with statuses. This helps track multiple invoices against a single purchase order (PO), making it easier to forecast budgets in real-time.
• Commitments Tab: This new feature lets users set up budgets and draw them down in real time, showing the remaining balance by line item and committed order. This capability ensures accurate budget forecasting on the order and invoice sides.
• One Integrated System: Every invoice coming into the system is paired and reconciled against the PO, providing real-time data to reconcile quickly. This integration reduces manual tracking efforts and improves financial accuracy.

The real-time data management system within SubBase provides an accurate picture of financial forecasting, with automated technologies providing instant access to data sources across projects.

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What are some recommended strategies or practices for budget management?

Effective budget management across all projects requires strategic planning and early execution:

• Early Setup: Establishing budgets and cost codes at the beginning of the project ensures consistency throughout the project.
• Simplification: Avoid overcomplicating line items. A simplified approach helps maintain clarity and manageability.
• Consistent Cost Codes: Ensure that cost codes remain consistent from pre-construction to field execution. This consistency aids in accurate tracking and reporting.
• Pre-Construction Hand-Off: A well-structured process that transitions smoothly from pre-construction to field operations is crucial. Many companies overlook this due to time constraints, but it is essential for seamless budget management.

By implementing these strategies and leveraging real-time data in SubBase, contractors can complete effective financial forecasting and budget management, ensuring project success and financial stability.