Junction streamlines business planning and reporting

Time to say goodbye to Excel

Helen Haines, Executive Manager Finance, originally joined Junction as a Financial Analyst. At the time, the organisation was heavily reliant on large, complex sets of Excel spreadsheets to produce their long-term planning, modelling, and budgeting.

Initially thinking the best way to improve and simplify how they tackled these tasks was through finding a partner experienced in Excel modelling, Haines also approached Fusion5 to discuss Workday Adaptive Planning.

“We needed to shift from our typical finance team mindset of not spending money on the tools we needed to do our jobs better and being more efficient. While quick to recognise the benefits of having better tools elsewhere in the organisation, we tended to underestimate the value of streamlining our forecasting and decision-making ability. Instead, we accepted the inherent errors in Excel, and the inefficiencies it created.”

Hello to Adaptive Workday Planning!

The inaugural meeting with Fusion5 and demonstration of Workday Adaptive Planning convinced Haines that the solution would not only do the job, but do it better than Excel. She was sold.

“After the introductory meeting, I was convinced that Workday Adaptive Planning was the right solution for us. I was initially anxious about the pricing, but as the solution can be used off-the-shelf (whereas Excel would have to be heavily customised), it was clear that it would deliver us more long-term value.

“We could see that it would also transform how quickly we could go from preparing our budget to building our long-term plans. At the time, it was taking us three months to build out the plan once the budget was approved.”

Smoothing out the lumps and bumps of cashflow with a block-funded grant revenue model

Junction is government-funded and receives a lump sum grant per financial quarter. However, says Haines, using Excel to manage the impact of the grants on cash flow over each three-month period – as opposed to a high-level yearly view – was an ongoing challenge as no two quarters are alike.

“A few years ago, our cash position wasn't as strong as it is now,” says Haines. “That really brought home how important it was for us to have visibility of the impact of funding on our monthly cash flow. With Excel we could only do a high-level annual cash flow report, it was simply too hard to model it on a monthly basis.”

The new Workday Adaptive Planning funding model allows Junction to enter their grant funding, view how it’s spread over the designated time period, and see the impact on the organisation’s profit and loss statement. Junction can add in a CPI increase for multiple-year funding, and even select how they want the grant funding to appear in their cash flow statement (for example, as recorded revenue).

The success of the block funding revenue model led Junction and Fusion5 to apply the same principles to managing the monthly cash flow for the organisation’s 10-year property development pipeline.

“Cash flow is important when you're developing properties,” says Haines. “You might spend $3M building and renovating properties over a year, and then in month thirteen, you get $3M back in sales. With Adaptive, we now have a month-by-month view.”

Personnel planning for accurate staffing scheduling and budgets

Haines and Fusion5 also developed a roster plan for personnel planning which allows Junction to schedule employees by the day of week, the hour of the day, and by role. Junction’s rosters now accurately reflect the staff members needed to provide round-the-clock support, while also capturing their daily rate per role from a background assumption table. The required team members are added to the roster, and staffing costs adjusted in real-time.

“With the roster plan we can now manage our personnel budget far more precisely. For example, we provide housing for children who are under state guardianship. Most houses accommodate three children and include round-the-clock staffing. But we’d never budgeted for the times where fewer staff need to be available, for example, during school hours, or more needed due to school holidays. We didn’t even realise we could accurately budget for the peaks and flows of staff costs until we implemented Adaptive. While we always estimated that we spent 70% of our government funding on staffing, we can now prove it. We’re far more accountable for how we spend our funding."

Helen Haines | Executive Manager Finance, Junction Housing

“And thanks to Adaptive, we can respond more quickly to government tenders for additional housing. We can replicate and adjust our existing rosters to provide accurate on-the-spot costs. If we’re asked to revise the cost to provide a fully staffed house for two children instead of three, it takes just moments to calculate. With Excel, we’d have to manually update nearly every formula.”

Once approved, the roster model and budget data is pushed into Junction’s personnel model which also acts as a mini payroll system, calculating shift rates, leave entitlements and more. Pay rates are uploaded from Junction’s actual payroll and attendance system, so the personnel model captures the impact of a rate rise or change due to penalty rates. While pay data is currently exported from the payroll system as a spreadsheet, the long-term plan is to share data directly to the personnel model. Haines says this will enable them to start reporting budget against the actual roster level — something that was never possible before.

Haines also says that the rostering and personnel model now gives them the new and much-appreciated ability to capture headcount and FTE costs in one system.

Capital expenditure model for streamlined depreciation and purchasing

To enable Junction to automate the purchasing and depreciation of assets (in particular vehicles), Fusion5 built a custom capital expenditure model.

“We own a fleet of around 50 vehicles, which we replace every three years,” says Haines. “I wanted to move on from managing our vehicles manually in a spreadsheet, to automatically calculating the annual depreciation and triggering the milestone disposal/replacement process.”

The Workday Adaptive Planning capital expenditure model allows for up to three cycles of replacement for each vehicle. It also calculates the impact on Junction’s balance sheet and cash flow, and generates the accounting entries required for accumulated depreciation and a vehicle’s eventual sale, saving Haines’s team both time and effort.

Capital development model for fast property forecasts

Junction owns and manages over 2500 rental properties. As part of their agreement with the South Australian government, they’re required to redevelop some of the properties as well as build more.

“We were using spreadsheets and an application called EstateMaster to produce development feasibility reports,” says Haines. “Generating these reports required us to manually export information from the application, enter it into Excel and manipulate it to get the information needed on project revenue and costs, housing demolition, redevelopment and new builds, planned sales and retentions, and property portfolio growth.

Leasing model to automate the complexities of AASB 16

Junction is required to comply with the Australian government’s new AASB 16 standard which introduced a single lessee accounting model. It requires Junction to recognise assets and liabilities for all leases with a term of more than 12 months (unless the asset is of low value), and to calculate the asset values in a specific way.

To achieve this, Fusion5 built and implemented a leasing model that generates all of the accounting entries required to reflect the purchase date, lease dates, NPV (net present value), interest, current principal etc. The entries are automatically added to Junction’s balance sheet and the profit and loss statement.

A well-planned and productive relationship

Haines says that the days of needing three months to go from budgets to building long-term plans are gone. “Now, we can update our budget in Adaptive and see the immediate impact on our long-term plan!”

After a general reluctance to share spreadsheets for fear that human error would damage the integrity of the data, Haines says “One of the benefits of using Adaptive for our reporting and modelling is that this can’t happen. Users in and outside the finance team can change a number and see the knock-on effect without breaking anything.”

Haines says that she wouldn’t hesitate to recommend Fusion5. “We have a great working relationship, and their technical expertise and business knowledge add real value to Junction.”