The fiscal year is configurable to fit our fiscal calendar

Description

The configurable fiscal year feature in Corporate Performance Management (CPM) software allows organizations to adjust the fiscal calendar according to their financial cycles. Most products allow organizations to use a specific fiscal calendar. Changing that calendar, or using another calendar, is another story and should be confirmed if it is a potential future need. This situation comes up with multi-subsidiary organizations, but especially with non-profit organizations who manage grants on independent calendars.

Example Use Case

Retail Businesses

Scenario: A global retail corporation with headquarters in the US operates in diverse international markets, each with unique fiscal calendar requirements. For example, the financial year in Australia starts in July and ends in June, while in Japan, it starts in April and ends in March. Meanwhile, in the US, the fiscal year follows the calendar year, from January to December.

Solution: With a CPM system that offers the fiscal year configurability feature, the retail corporation can set custom fiscal calendars for its operations in each market. The system can then generate financial reports, budgeting, and forecasting analysis according to the specified fiscal calendars and subsequently roll all those businesses up into a master budget.

Non-Profit Organizations

Scenario: Grants can originate from various sources (government, private foundations, international organizations, etc.), their fiscal periods might differ. For example, a grant might run from April to March, while another operates from July to June. When preparing their annual budget, the non-profit would consider these different grant cycles. This could involve pro-rating or allocating expenses and revenues based on when they are expected to occur within the different grant periods.

Solution: The solution here is much the same as in the retail example above. For each grant, a separate budget is often created that aligns with the specific fiscal calendar of that grant. This helps in tracking income and expenditures related to the grant accurately and aids in reporting back to the grantor.

Considerations

This scenario is one of the most challenging aspects of financial planning and budgeting, as the concept of time introduces significant complexity to any product. Non-profits in particular have struggled with this for decades, and as result have maintained an enormous amount of Excel files to accommodate all of their grants.

Systems that solve this issue handle dimensions very well, and have a robust formula syntax that allows them to calculate and eventually merge all of these variables into a master budget. This is solved in the more enterprise-focused systems on the market and almost always requires implementation services to accomplish.

Be aware that, no matter what system you use, you can expect a multi-calendar planning environment to have significant maintenance - especially with grants, as they come and go within a non-profit. Their transient nature makes it difficult to bolt down a process for all of them.

Questions to Ask a Vendor

• Configuration Options: How easy is it to configure the fiscal year within your system? Does it require technical expertise, or can it be done by the end-users themselves? Can you show me?
• Integrations: How does your system integrate the configured fiscal calendar with our accounting systems? This is important as organizations with a multi-calendar environment tend to have separate accounting systems for each subsidiary.
• Support for Multiple Fiscal Calendars: Can your software handle multiple, distinct fiscal calendars for different areas of operation?