Posted by Charlotte Taylor on 30/11/18 16:19

The sands have shifted in the social housing market with government money being pumped into creating homes.  In recent months there have been a number of mergers, so what does this mean for the industry, and how do you forecast post merger? We look at the stories of 3 companies for ideas.

Forecasting post merger in the housing sector

When the business chooses to go buy another or join forces, the result is parallel lines. Two general ledgers (GL's), two processes, different cultures, teams and locations.

This tends to precipitate transformation projects. A new enterprise resource planning (ERP) maybe needed to join systems, and help overhaul processes for the better. New branding and cultural identity helps bring people together under one umbrella.

All this is necessary, but in the meantime finance still have to produce management packs and reports for the business. Budgets still have to be prepared, plans and forecasts produced.

Forecasting pain points post merger & acquisition

Here are some of the most common pain points FD's and CFO's struggle with when big change occurs, and in particular when a new company is added to the mix. 

 

  • Two or more GL's which need to be joined to produce a forecast.
  • Multiple reporting packs
  • Different time lines - end of years, budgeting cycles etc..
  • Processes that don't match,
  • Conflicting business structures
  • Need for consolidation reporting

All of the above need to be addressed, but time marches on and many of our clients explain that the need to forecast becomes even more acute as change hits the business.

Property clients SDL, were in exactly that situation. A stream of acquisitions under their belts, each coming with a new GL, reporting structure and team who worked independently in their own way, across 6 or more locations.

The challenge was to pull these disparate parts together. Consolidation was the push, which drove their Project manager Martin Webster to look for a system which would enable them to plan more effectively, whilst meeting their reporting obligations and deadlines.

Transformation centred around FP&A. The thinking behind this was that planning and reporting doesn't stop. The ability to look forward, generate accurate forecasts and report without interruption was critical for the business and stakeholders.

Get Living London, were in a similar situation, they were struggling with getting their data in one place and reporting accurately, whilst expanding fast:

"Data was available in two different sources, which led to two or more reports on the same numbers, each with differing results"

Get living London, are the developer and landlord for the 2012 Olympic village. They needed to forecast in more detail, their new way of renting needed to model the risk and costs of every unit. This meant more data, dimensions and assumptions whilst meeting the reporting demands from stakeholders.

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With a new ERP project looming they implemented a cloud planning solution to enable them to model, budget, plan and report faster. This released time from Excel drudgery to do real analysis.

Former Get Living CFO Nick Read saw his team liberated from number crunching using cloud based Adaptive Insights:

"I'm now paying teams to do the job intended. Quality of work has improved, they are engaged, and we can spend more time planning more constructively"

 

Forecasting challenges in the social housing market

With the shifting sands in the social housing market, which have seen so many mergers in recent months, the need to forecast, plan and report in ever more detail, sophistication and accuracy will put a demand on finance teams in these organisations. 

Planning in this sector requires the ability to connect to data from many systems such as maintenance providers and existing forecast and report system Brixx to satisfy regulatory demands.

Revenues can be complex, deriving from not only direct rentals, but via government benefits and universal credit. Payments for income on renewables, calculating percentage uplift, weighting and much more need to be accounted for.

The ability to model with an integrated forecast showing P&L, balance sheet and cashflow allows social housing organisation like Peaks and Plains to get a better view both short and long term to see the impact on the business.

Peaks and Plains have taken the plunge and are making the move away from Excel. The ability to automate much of the number crunching work, integrate data feeds, for a more flexible forecasting models which meets both regulatory and commercial reporting demands led them to adopt cloud planning solution, Adaptive Insights.

Like many within the sector, the need to see short and long term views with more granularity was the push. The same applied to both Get living, and SDL, who also made the move to cloud planning. 

 

WATCH ADAPTIVE INSIGHTS IN ACTION NOW:

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The variables at play mean all three companies in slightly different areas of property management needed a solution which could integrate their data, model, based on drivers and assumptions, plan short and long term, report easily and in the case of SDL consolidate. A cloud platform meant access and sharing as well as admin access and security were far more robust  than that of an Excel based system.

Don't get left behind in the move to cloud planning. The days of Excel are numbered, and as the burden of reporting and regulatory pressures increases, as well as the need to protect margins and manage ever more complex revenue structures the spreadsheets days are numbered.

"Adaptive insights has given us our lives back. I wish we'd moved sooner, it's an old world with spreadsheets" - Martin SDL.

We'd love to help you get your life back

join us at a Let's Talk Finance event near you.

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Tags: Forecasting, property, social housing


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