Activity-based costing data can be used to build a test case operational budget (OB) model. In this article, Alan explains the test model and provides data that was used in the process.

In this blog I take a broader view of new products and talk about how best to monitor progress post-launch when information is still a little sketchy, volumes are still very low and reporting mechanisms may not yet be fully in place.

Among FP&A challenges understanding, explaining and forecasting revenues evolutions are one of the top items. It may be more or less difficult depending on the company business.

Traditional budgeting process normally starts with forecasting sales levels, cost of goods sold then all operation expenses until reaching to the proforma income statement without understanding how changes in costs (both variable and fixed) & sales will affect profits in future periods. But modern FP&A professionals started to implement CVP analysis during the annual profit plan to study the interaction of sales with variable & fixed costs on the profits received.

Many commercial finance or FP&A professionals focus on getting the model right and not enough time considering the how people are going to react to the outcome. This blog sets out a few tips to navigate the politics. In the words of Oscar Wilde ‘The truth is rarely pure and never simple’.

There are several key components in the FP&A role. The way profitability is analysed and used to improve the business results is one of them.