Itemize planned expenses under certain types of accounts such as travel, projects, assets with drivers building the full cost

Description

Itemizing planned expenses in Corporate Performance Management (CPM) software involves categorizing and breaking down future financial expenditures under different types of accounts such as projects, travel, and assets. This requirement helps maintain a detailed and accurate record of all planned costs within a cycle, facilitating effective forecasting, budgeting, and cost control. It assists in driving the full cost build-up for the planned expenses, hence aiding in comprehensive financial planning.

Example Use Case

Scenario: A healthcare corporation uses CPM software for financial planning. They need to plan out expenses for various live marketing activities such as their user conference, trade shows, customer meetups, and a seminar roadshow.

Solution: They configure a sheet in their planning tool that allows them to enter in line-item details for these events. When adding the event they are able to include the amount of people, destination, days, per diem, flight estimates, and so on. The system automatically calculates the sum for the different components of the trip and assigns the expenses to the appropriate general ledger expense account.

Considerations

These types of sheets are usually very specific. Itemized detail for things such as travel, events, asset purchases, limited scope projects, marketing campaigns and so on come to mind. The cost for each of these can be estimated using a collection of drivers as new units are entered, and the timing of them can then place the calculated values into the right account and the right time in the future.

The question to ask yourself on some of these use cases is, does this detailed calculation really get us any closer than doing something highly summarized? For instance, for a trip to San Jose from Denver, we can assume $500 for flight, $125 for per diem and $250 each night for hotel. That is easy to estimate on a calculator. Will a build-out itemized sheet really get you any closer? If the answer is yes, it makes sense. But if it creates more labor to produce the forecast and to maintain the sheet, avoid it.

Questions to Ask a Vendor

• Itemized Build-Up: Does the system support adding rows, selecting drivers and calculating the cost it the item?
• Connection to Model: Once calculated, how does the system assign the cost to an account in the plan?
• Adding Models: How easy is it for us to add a new table and drivers for a new use case?