In almost every organization, field managers seem to hate budgeting, capital expenditure justification, acquisition analysis, and P&L reviews. These processes usually involve multiple iterations, and frequently become a corporate game driven by executive mandates dictating what earnings and return on investment targets need to be. Ultimately, these financial exercises usually take a lot of everyone’s time and do not really positively impact the business. We believe that these financial exercises, done right, transform field managers into competent business people that understand how their daily actions impact financial performance.
One example of customized financial modeling is the Red Hill Advisor Zero-based Budgeting process, a powerful way to change the way your organization thinks about accounting and financial performance.
The model is created from scratch – historical performance is not considered until the very end of the budgeting cycle,
Volumes are based upon market share models reviewed and validated by your sales team,
We budget based upon what is actually controlled by the field team – using labor hours, for example, as the cost driver rather than straight wages,
The field management team is actively involved in the creation of the budget – we educate and train your team on how the numbers are created and impacted,
If the end profitability target of a zero-based budget is not acceptable, we work with the field to come up with a plan to realistically make the budget,
The budget model is customized to tie into your existing financial format, and
Upon completion of the budget, we provide our Profit Forecasting Model to teach senior management how to predict monthly profits quickly and accurately.