Cash apps focus interest in forecasting

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Over the past two years, AccountingWEB  has been tracking a steady rise in the use of forecasting, planning and analysis (FP&A) applications, driven mainly by small businesses rather than corporates or practising accountants.

The current pathfinders for forward-looking analytic applications are two programs that specialise in cash forecasting and reporting. Between them, Fluidly and Float racked up more than half the responses for this category in our 2018 software survey. In many instances, the people registering their ratings were small businesspeople rather than qualified accountants.

AccountingWEB’s survey is not conducted in a market research laboratory and is influenced by many factors, but the rapid growth being experienced by specialist programs that focus on the most persistent business niggle should not be overlooked.

Telling someone, “This program will help you manage your cash flow better” is a lot easier to understand than explaining how flexible analysis tools will help them adopt a proactive, forward-looking perspective on strategic business decisions.

Changing of the guard

Better decision-making has been part of the business software benefit sell for generations, yet the products that are featured in AccountingWEB’s forthcoming forecasting, planning and analysis software review account for just over 10% of the total number of accounting software users in our 2018 survey.

A look back at the changes this industry has gone through can highlight some of the factors that may be holding it back.

Around 2005, AccountingWEB’s software user surveys were picking up a lot of interest in corporate performance management tools from mid-market software users. After getting client/server management information systems in place, they were starting to look at extracting data from systems such as Pegasus, Sage 200, SAP, Access, and Exchequer to influence management decisions.

The popularity of AccountingWEB’s Excel pivot table tutorials at this time confirmed how keen management accountants (and their bosses) were for any opportunity to gain more meaningful insights from their transactional data.

This hunger prompted an acquisition free-for-all in which all the big enterprise software powers snapped up the leading corporate planning developers: Hyperion (Oracle), Business Objects and Crystal Reports (SAP) and Cognos (IBM).

Then the great financial crash happened. The question might be posed at this point that if market analysts were using these tools, why couldn’t any of them see the crash coming?

In contrast to the expected double-digit growth, those tools have receded from AccountingWEB’s world. “Corporate performance management” (CPM) might be all the rage among the Fortune 500, but there was negligible growth lower down the market until the appearance of Xero, followed by companion FP&A apps such as Spotlight Reporting, LivePlan and Fathom around five years ago.

Since then all sorts of variants have appeared, including Futrli, Float and, in the past year, Fluidly.

In contrast to the grand all-purpose CPM suites and their six-figure price tags, accountant Niall McGinnity of Nuvem9 points out that these cloud add-on applications are good at some forecasting, reporting and analysis tasks, but not all of them.

“No one tool fits all the bases,” McGinnity told AccountingWEB. “So I came to the conclusion that I needed to use a mix of the right tools rather than invest everything in just one.”

Advisory accountants lead the way

The reinvention of performance management is being led not by accountants in business, but by cloud-powered practitioners like McGinnity. With access to clients’ transactional data, these accountants are using forecasting and analysis tools to enhance the advice they give their clients.

McGinnity uses Futrli, Dryrun and Float and has experience with Fathom and Spotlight. Acting on behalf of business customers across Europe, Nuvem9’s biggest priority is for software that can help accurately calculate short term operational cashflow. This gives the business and its adviser a realistic position on what money will be available based on when customers will pay and what cash is due to be paid out.

Next on the agenda are forecasts looking forward over three to five periods for funding and investment purposes. McGinnity also wants to run annual budgets and ‘what if’ scenarios quickly to support fast decision making and planning.

Nuvem9’s priority on cash management is a reminder that cash is still king and is beginning to wield its influence on this segment of the business software market.

A complex landscape

The FP&A software landscape is a patchy one that includes programs built into existing accounting systems alongside DIY forecasting models and Excel analysis tools that don’t show up in sales figures or market research surveys. Since Sage retired the desktop Winforecast application, the vacuum has been filled mainly by the cloud add-on generation.

AccountingWEB's Software Reviews comparison for this sector focuses on the products that are in most widespread use, but there are other variants out there that continue to cater for more niche tastes; these include a number of forecasting tools that continue to run on Windows and a few newcomers based on Microsoft's Power as well the built-in apps and corporate contenders already mentioned. Here's a quick overview of the main players in these categories:

Other FP&A applications worth considering

The Excel export function has become a standard feature of any accounting package. And in many environments ODBC links and Microsoft Power BI or Excel pivot tables are applied to produce summary figures for analysis. These approaches can all produce effective results, but the inherent risk of errors, lack of documentation and long-term support put them at a disadvantage to commercial applications that have been hardwired to application programming interfaces (APIs) and subjected to a degree of software quality control.

In the long-term, doing it yourself is a false economy. So while growth of specialist FP&A applications is steady rather than stellar, it will gain momentum as accountants in practice and business realise the benefits.

AccountsIQ CEO Darren Cran acknowledges the mid-market “void” when it comes to adopting FP&A: “You’ve got the tools, but only one in 10 accountants is an analyst. The mid-market lacks the skillset to adopt them.”

Built-in tools of the kind AccountsIQ, SAP Business One, Exchequer and Access build into their finance applications take care of the plumbing and put readymade analyses and forecasts into the hands of managers at all levels.

“We’ve tried to make it easy to use and deliver business intelligence from one version of the truth,” said Cran. “That avoids the inevitable ‘why is that figure different to this figure?’ questions because it’s based on a different source. If everything is driven from the underlying transactions, the user doesn’t need to have a deeper understanding.”

Knowing how to put together the numbers is an essential skill, but the task shouldn’t eat up all the accountant’s time. Whether in business or practice, the faster accountants can get their hands on meaningful numbers, the more time they will have to exercise the skill that really matters in business analysis: understanding what the figures are saying, spotting the significant variances and using them to help businesses make better decisions.

AccountingWEB’s Software Review of forecasting, planning & analysis applications will appear on the site very shortly to make it easier for accountants to identify suitable tools for their needs. It will be accompanied by similar guides to practice management and data and expense management applications. More details will be published in September, when the results for the Accounting Excellence Software Awards are revealed at the ceremony in London on 20 September.

About John Stokdyk

AccountingWEB’s global editor has been with the site since 1999 and likes to spend his time studying accountants’ technology habits. When not nerding out, you can find him exploring obscure indie music and searching for the perfect organic sourdough loaf from his base in Brighton, UK.

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12th Jul 2018 13:02

John, I have to agree with the old "cash is king" sentiment here. By far the most common requirement that comes up from my customers is related to this - be it to help manage a company's collections processes better or take a broader look at cash-flow and liquidity. From a time perspective, the interest tends to be around anticipating cash-flow and directing collections activities for the next four weeks while also taking a look back over the last number of months to see trends. A good set of transactional data from any accounting software can enable this.

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By Halex
12th Jul 2018 21:00

I have been trying to get to grips with this area for some time . My requirement is to have a tool that does cashflow forecasting over a 6-12 month timeframe, but in particular has the ability to cope with more projects based, lumpy cashflow where you usually need to combine lines that follow seasonal patterns, fairly steady overheads and then laid on top the big number changes that can make or break your figures. The 1-5 year business plan tool is still my ideal so that you can generate the projections for P&L, balance sheet and cash all at the same time. Futurli looks lovely, but it doesn't seem that easy to get to grips woth for foreacsting. Probably great for setting up pretty graphs.

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