It’s no secret that today’s business leaders are facing unprecedented uncertainty. Between pandemic insecurities, a supply chain crisis, labor shortages, and the growing threat of recession, companies that rely on traditional planning and forecasting may find themselves struggling to stay competitive. Fortunately, modern financial planning and analysis technologies are offering savvy business leaders the opportunity to get ahead and stay there. By changing your current FP&A process during these unpredictable times, you can say goodbye to old school budgeting and planning and hello to a new paradigm for forecasting success.
1. Frequency of FP&A process should increase
In the current economic climate, waiting too long for your financial planning and analysis processes can cause serious issues for your business. Not only do spreadsheets and other traditional budgeting tools result in errors, but they also prevent companies from updating information as it comes in. To stay agile and accurate, businesses need to utilize automated financial tools that allow for rolling forecasts. When you update your forecast regularly, you have a better chance of identifying triggers and trends that can impact your bottom line. The result is that you can evaluate what-if scenarios and adjust your plans as needed.
2. Level of detail in your model, drivers, and assumptions needs to become more precise
How detailed are your models, drivers, and assumptions? If you aren’t engaging in automated driver based planning, you’re missing out on an opportunity to achieve planning agility while also improving accuracy. An FP&A process connecting resources and activities with financials, driver-based planning involves identifying key drivers and modeling scenarios around them. In this way, businesses can better assess how they’d sink or swim when faced with certain variables. The goal is to improve planning agility without getting bogged down in manual data entry or dealing with the errors common in spreadsheet macros and formulas.
3. Tracking performance to plan across these assumptions and drivers is important
It’s not enough to identify the main drivers affecting your business. If you want to generate the best business strategy, tracking performance across assumptions and drivers is key. Using an FP&A tool like Planning Maestro, companies can identify the most crucial business drivers and easily assess their results before engaging in strategic decision making. For example, a business with multiple stores may opt to track store size, product volume, sales staff size, and revenue, among other metrics. Engaging in this type of performance tracking helps companies evaluate various planning strategies and determine how adjusting one driver can impact others long term. Additionally, leaders can easily generate operational reports conveying this data to be viewed by others within the organization.
4. Collaboration with business leaders closer to the assumptions needs to increase
Business leaders often make the mistake of only involving owners and other key stakeholders in decision-making. However, the truth is that ventures are more likely to be successful when they include multiple team members in the process. In particular, individuals who work directly with the drivers and metrics in question will have a unique perspective. In the long run, an FP&A process with collaborative planning results in deeper insights and more accurate, effective forecasting. Make adjustments as information comes in or adjust goals over the long term to better reflect the changing reality.
5. Increase communication across the company to keep your FP&A process nimble
A record number of businesses began operating remotely during the pandemic, and many continue to do so today out of either convenience or necessity. As a result, your sales, operations, IT, and finance teams may not be in the same place at the same time. If you want your FP&A process to stay nimble during this time of upheaval, having access to a digital dashboard is essential. AI-based platforms mean that individuals throughout the company can access accurate, up-to-the-minute data without leaving home. By allowing for better communication and collaboration, this software supports operations managers in seeing the results of decisions while enabling them to change assumptions as needed.
A state-of-the-art financial forecasting software, Centage’s Planning Maestro is designed to help businesses stay agile in times of economic upheaval. Using the latest automation technology, companies can gather the practical, data-driven insights they need to make intelligent contributions. Along with helping businesses see how and why actuals differ from plans, Planning Maestro empowers them to generate accurate P&L Statements, facilitate better collaboration company wide, and initiate changes quickly in response to predictions and results. Discover how Centage can help your FP&A process and your business stay competitive.
Centage Corporation’s Planning Maestro is a cloud planning & analytics platform that delivers year-round financial intelligence. With Planning Maestro, Centage offers the sophisticated features needed by small and mid-market organizations to integrate budgeting, forecasting, and deep data analysis within one easy-to-use, scalable SaaS solution. For more information on how to modernize your office of finance with intelligent planning, view our product demonstration video, or call 800-366-5111.