As we mentioned in our last blog, there really is no going back to the old way of business budgeting and planning, which is why FP&A professionals refer to the current state of finance as the new normal. And one of the reasons the ‘new normal’ will remain is that budgeting and planning were headed in that direction long before the pandemic and its lockdown orders – the pandemic simply accelerated the trend.
This is a phenomenon that is felt throughout our economy. According to a McKinsey Report, the pandemic crammed ten years worth of expected growth in ecommerce into just 90 days. Ditto for the transformation of TV into an addressable medium. No matter where we look in the economy, we see evidence that the pandemic accelerated the drive to efficiency and transformation that was on every organization’s roadmap, regardless of sector or function within the company. Planning is no exception.
Taming the Havoc – Transforming Your Planning and Business Budgeting Processes with Cloud FP&A
Now that FP&A teams have been thrust into a new normal, they need to figure out how to adapt – or tame the havoc – of the past 18 months. Here’s how transforming and modernizing planning and business budgeting processes allows them to thrive in the new normal.
- Time-saving workflows. Every FP&A professional will tell you that what their teams need most of all is the ability to reduce the workload and time required to produce the latest estimates (LEs) and accurate forecasts that are required to help identify micro-opportunities. Today, management is asking more questions of the FP&A team – more frequently – and finance teams need to be able to get accurate answers, faster – to help them make more data-driven decisions. A cloud FP&A solution offers built-in workflows that make quick work out of updating forecasts, and testing what-if scenarios.
- Faster handoff between accounting and FP&A. The accounting team deals with historical data — revenue booked, expenses incurred — which the FP&A team uses as raw data. In the days prior to the new normal, that handoff of data occurred at the end of the month, when the accountants closed the books. But with emphasis on the need for finding micro-opportunities and fine-turning business performance, FP&A teams are asked to provide guidance every day of the month, and they need access to historical data in real time. With a cloud FP&A solution, that handoff is automatic, and because it pulls data from the underlying business systems, it is absolutely accurate.
- Complete synchronization of actuals and updates. FP&A teams need the ability to pull the actuals from the end-of-day and pull them into the forecast in real time. Because a cloud FP&A solution is fully synchronized with your GL, teams are able to provide forecasts in minutes, rather than days.
- Flexibility in Budget Methodology. Budgeting styles have come in and out of style. A few years back, the FP&A journals talked about the importance of driver-based budgets. Before that, rolling budgets was the term of the moment. Today we hear about zero-based budgets, in which every dollar must be defended. But here’s the truth: while some methodologies are more suitable to certain sectors of the economy, most organizations will use aspects of each methodology. Some CFOs will implement rolling budgets, while the CEO demands to know if specific expenses are necessary, and if so, why. With a cloud FP&A solution, all budgeting methodologies are supported, providing CFOs with the flexibility they need.
- Self service. While FP&A teams are certainly keen to answer their CEOs’ questions, there are many instances when self-service is crucial. Financial teams would like to give senior executives the ability to run their own reports comparing up-to-the-minute actuals to the forecast, for instance. Powerful self-serve analytics offered by cloud FP&A solutions deliver fast answers to important questions. At their own convenience, users can obtain accurate forecasts, analyze and visualize large datasets, and generate multi-dimensional pivot reports.
- User Controls. Other stakeholders in the company want to access financial data to assess their department’s performance, but simply providing the VP of Marketing or Customer Service access to the platform is out of the question. Much of the data, such as employee salary or client payment information, is highly sensitive. Cloud FP&A solutions offer robust user controls to protect sensitive data, including role-based permissions so that employees have access to the data they need. Additionally, individual users can customize how that information is displayed, so they can hone in on the data that’s most relevant to them.
The new normal has also rendered the familiar business budgeting and planning tools obsolete. Many platforms have rigid underlying models and require expensive consultants to modify them, hardly an ideal situation for assessing the implications of any business decision. The new normal demands a greater degree of flexibility, without any degradation in accuracy – which is where Cloud FP&A software comes in. Cloud FP&A solutions connect to all important data streams and feeds, fosters continuous collaboration with people and partners across the business and is always on, dynamic, self learning, and course-corrects to optimize outcomes. It guides decision making and assumptions based on history, trends in the marketplace, and statistical models to project the future.
Centage Corporation’s Planning Maestro is a cloud-native 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.