How to Conduct a Plan Vs Actual Analysis With Spreadsheets in 2022

Plan vs. Actual Analysis: A Step-by-Step Guide

Having spent decades working with plan vs. actual in spreadsheets, I understand the importance of comparing forecasts and budgets to actual results. Back in the 1980s when I started Palo Alto Software, the only way to do this was through manual spreadsheet analysis. Today, tools like Microsoft Excel and Google Sheets make it easier and more affordable to conduct plan vs. actual analysis.

Start with Your Spreadsheet

When setting up your spreadsheet for plan vs. actual analysis, organize your budget and forecast in a horizontal layout with categories in the leftmost column and months spreading to the right. This layout allows for easy comparison and tracking of data over time.

Spreadsheets are versatile tools that offer infinite possibilities for calculations and analysis. Use formulas to calculate numbers based on your data inputs, making sure to keep your rows and columns organized for easy reference.

Forecasting and Budget Math Made Simple

Don’t be intimidated by the complexity of spreadsheets. Most calculations for budgeting and forecasting are straightforward and can be done with basic formulas. Ensure that your calculations align with your accounting categories to maintain consistency and accuracy in your analysis.

Match Your Chart of Accounts

It’s essential to align your forecasting categories with your accounting categories to streamline the comparison process. By keeping your categories consistent, you can easily track plan vs. actual results without the need for extensive data manipulation.

Get Your Last Income Statement

Referencing your previous income statement while developing your future projections can help you stay aligned with your financial goals and performance targets. Make sure to match your accounting categories with your projected statement for a seamless comparison.

Set the Right Scope

While we focused on sales budgeting in this article, it’s crucial to track and manage plan vs. actual for all aspects of your business financials. By monitoring sales, costs, expenses, profit and loss, balance sheet, and cash flow, you can gain a comprehensive view of your business performance.

Putting Your Actual Results into a Spreadsheet

Exporting actual data from your accounting software into a spreadsheet format allows you to compare it directly with your budget or plan. Ensure that your spreadsheet structure matches your accounting outputs to avoid errors and discrepancies in your analysis.

Calculating the Plan vs. Actual (Variance)

Comparing your budget or plan with actual results involves calculating variances for each category. Positive variances indicate favorable performance, while negative variances highlight areas for improvement. By analyzing these variations, you can make informed decisions to optimize your business operations.

Remember, the goal of variance analysis is effective management, not just accounting. Use your plan vs. actual results to guide strategic decisions and drive business growth.

By following these steps and leveraging spreadsheet tools effectively, you can conduct thorough plan vs. actual analysis to enhance your business performance and achieve your financial goals.