Planning and Controlling

Structural categories

Project planning

Planning and Forecasting

Nature of Planning and forecasting

In Contrast to the exact booking of past transactions in the Accounting, Forecasting and Planning are much more a kind of Art-form. This is due to the fact that Planning and forecasting are in advance view of future activities.

The difficulty lies in the fact that Planning and forecasting have to follow the "model of the Accounting" hence they have to treat activities in essentially the same manner and  on the other side it has to be made in a much more aggregated manner then the actual Accounting bookings.

So in a way Planning and forecasting has to be kept simple, yet it must in essence come to the same result as the accounting booking of the underlying activities once they happen.

Many systems and ERP solutions have been developed and in deed they ensure in a way consistency, but then again the statement "keep it simple" does not apply to them.

Planning and Forecasting activities

Planning essentially concentrates on the establishment of a future fiscal period model that reflects closest the operational reality and the prevailing Accounting treatment.

Forecasting mainly concentrates on a revision of once planned items taking into account the already realized activities during a fiscal period

Planning and Forecasting structures

It is often the case that the reporting structure is changing. Product hierarchies change, responsibility areas change and the like.  It is therefore important to reflect this in the Planning and Forecasting systems.

While planning a future fiscal period in a new product structure does seemingly only bring the challenge of comparability with the past, there is a much deeper and more difficult element hidden in it.

P&L items are accumulated Year to date and have as such (except for comparability with the past) no real dependency on the past. However Balance sheet items and ultimately Cash flow calculations depend on the existence of Beginning and Ending balances in the same structure.

Here it becomes apparent that for example the latest Year end Forecast of the current year's balance is the opening balance of the new fiscal period which is reflected in the Planning.

To be able to cope with this the Planning and forecasting system used, one must be able to "translate" instantaneously one structure into the other (at least of the ending/opening balance pairs).

 However most ERP solutions lack the ability to plan in different "product structures" which poses the problem that another compensating mechanism needs to be in place.


Planning and Forecasting is absolutely essential for any serious operational activity. Yet the support in drawing up budgets are not always sufficiently met by ERP or other planning systems.

It needs to be recognized that planning is as individual as your business is and the means and tool use to plan and forecast have to fit to your operational reality. If not then budgeting and forecasting will always be seen as a painful duty rather then a helpful tool for monitoring and recognizing corrective needs.

To achieve acceptance, it sometimes only needs a "different" way of using the given planning tools in place or using  given tools like Excel or Access in more inventive ways.

 Due to its essential nature it is a must to have a look at the planning and forecasting reality in your operation. In almost all cases there is frustration in place which should be a clear sign for taking the topic serious.

Reshaping the planning process / planning tools is an often highly complex activity which should by all means be accompanied by an external coach to avoid operational interruptions and to guarantee an truly improved system.

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