Cooper, Gay, Swett & Crawford, an international insurance and reinsurance broker, uses standard templates and a clear timeline to ensure the budgeting process doesn’t drag on in multiple iterations and FP&A can complete it in time for the board meeting in December.

CGSC has 25 primary reporting companies supporting its clients worldwide. The CGSC budgeting process is handled by a traditional approach, according to Timothy Green, head of financial planning and analysis.

CGSC’s budgeting process starts in September when Green meets with the CFO to go over the previous year’s budget and determine what improvements need to be implemented this year. Next, “my team and I develop Excel submission templates based on last year, which build on the new information requirements and improvements for this year,” he said. Those templates, which include all key requirements, form the basis of the current budget and are sent out to the companies to complete, with a clear timetable. The submissions start the process of creating the budget, which will be delivered to the board at a meeting in December.

Each template contains about 25 sheets, which include about five sheets of numbers, including a high-level P&L, balance sheet and cash flow. “There are more detailed sheets, which go through costs, mostly to do with salaries—a key cost driver for us—as well as T&E and other costs, such as office, IT, insurance, etc., as well some intercompany charges,” he said.

The later section then allows for a free-flowing text portion in which subsidiary management can talk about what is happening in the business with reference to the last few years’ growth, and what they’re forecasting for the current year and budgeting for next year.

Lastly, there’s a section in the resport that allows FP&A to explain the company’s marketplace strategy and the risks the business is facing in regard to competitors, and/or any foreseeable macro risks in the coming year and what the company could do to minimize their impact.

The structure of the template is constant for all companies and cannot be altered by them. This is done to ensure consistency of data and ease of consolidation.

The companies are given 6-7 weeks to complete their individual template. Then, “group finance does the preliminary review,” Green said. “There’s a wide range of skills across the 25 organizations, so we need to ensure there’s reasonableness in the submission, and [that] the key variances are explained.”

The next step is to submit the 25 companies’ budgets to the CEO, CFO, CAO, and CCO. Each company’s leaders meet with the executives, either in person or via a conference call, to discuss the numbers in a 1-2 hour meeting that often produces changes to the numbers.

Following the meeting, local management sends in a new template. “I then go through to ensure all changes have been made. Once they’ve been done, the budget is approved,” Green said. “When all the final submissions are received by the head office, we consolidate the numbers to produce a group-wide picture, and pull out key high-level pieces of information to form a story of where we are, where we’re going to be, and our opportunities and drivers. We look at trends across the group, [such as] market conditions, and also large company/regional specific items which are driving the result. All P&L items are consolidated into a system, but non-P&L items are held and consolidated in Excel. As a global company with a UK head office, there’s a lot of foreign exchange impacts, transactional and translational, built into the budget, so we do a lot of sensitivity analysis in terms of FX impact so we know how it will affect the group.”

Their ability to keep the process down to a total of three months is mainly due to the standardization of the templates and having strict protections regarding the use of macros in Excel, according to Green. In addition, planning ahead saves time. “If we have restructuring or new companies, we try to find out before the budget process, so that saves time and avoids delays,” he said. “Senior management commit a lot of time to the budget at end of October.”

That means companies need to start in September and stick to the 6-7 week to fill out the first iteration. They then have a week or so to make any changes needed after the presentation. “Having strict deadlines and tracking of submissions is critical,” Green said.

While the budget is considered fixed at that point, “we do change it because of currency movement, as it’s based on pre-established budget rates. We flex our budget monthly based on actual exchange rates throughout the year to match actual exchange rates,” Green said, “which forms the basis for management to judge performance and compensation.”