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FP&A Transformation: Adapting to the New Normal

January 26, 2021
Centage
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We’ve brought together two senior members of our Consulting team who work with and support our customers on a daily basis to share what they are learning about how Finance teams are adjusting their processes, priorities and goals for the year ahead. Olga Melnik and Lori Murphy are both Directors of the Centage Consulting Team.

In talking with customers, what are their biggest challenges now as we start 2021?  

Lori Murphy: As we emerge from 2020 there are two contrasting truths about the current budget season. Companies recognize they need real budgets for 2021 to match resources with strategy. However, they know the business-as-usual budgeting process, with its traditional inputs and standard approaches is no longer appropriate. There is a pressing need to streamline the overall budget process to react more quickly and efficiently, and use more rolling forecasts for 2021 and beyond.Olga Melnik: We’ve finally put 2020 behind us, but companies are still faced with many challenges in the current year such as predicting the market and understanding how the outside climate will affect their business. Despite the uncertainty, companies still have an optimistic outlook and are becoming more creative, innovative and smarter after the lessons learned from 2020. Dashboards, software automation and collaboration allows businesses to scale and run scenarios at any given point so that companies are prepared for the future.

How have their budgeting, forecasting and/or reporting processes changed as a result of the current business environment?

Lori: Many organizations are taking actions to emerge into 2021 stronger, making the necessary changes to financial reporting and forecasting, from annual to quarterly, monthly or even more frequent - switching to a more proactive approach - as they have been faced with overwhelming, competing challenges and uncharted waters, continually navigating the impacts of the COVID-19 pandemic.Olga: As companies wrap up their budget year, they are looking at ways to optimize their current state of reporting. Clients are gathering additional information for forecasted income statements, balance sheet and cashflow and are getting more focused in projecting their 3, 5, 10 and even 20 year plans!

What are their priorities and subsequent goals for 2021?

Lori: The priorities and goals we are seeing from companies for 2021 as they prepare their budgets are: stress-test scenarios and assumptions to counter uncertainty; build the business from zero base to determine key business drivers; hold back spending centrally and provide contingent resources and incorporate flexibility into budgets; assign talent to the highest-priority areas to prevent burnout and last but not least; rethink decision making to speed up and eliminate biased processes.Olga: Companies are focusing on collaboration this year and having the ability to have one source of the truth. Collaboration allows employees to be responsible and accountable for their own budgets and forecasts, while also improving the deliverables in a much faster time frame.

What key actions should Finance professionals take today, to ensure they have a successful year?

Lori: Companies can be more strategic and successful in 2021 by rewriting the rules and stop settling for less in their business. It is an opportunity to cast a strategic vision and create more success and growth by: embracing change, prioritizing customer needs, working smarter not harder and being a confident leader who empowers others.Olga: Efficiency is key for 2021! Since we cannot predict today’s world, having the right people, tools and technology is crucial in any business and prepares the companies for the unknown. By being able to create scenarios on the fly with Planning Maestro, customers are spending less time on re-creating models every time there’s a business change.

What advantages does Planning Maestro offer to support organizations as they transition to rolling budgets to address the dynamic business environment?

Lori: Using Planning Maestro for rolling budgets allows businesses to adjust their forecast during the year in response to changes in the business environment - which is so critical this year.  This allows them to reallocate funds from segments that are not performing well to ones that are, and allows businesses to respond more quickly to opportunities that arise.Olga: For example, rolling budgets allow the employers to incentivise their employees with quarterly bonuses that are based on overall company performance. Planning Maestro can automate such processes using related drivers that can be modified on a regular basis either by month, quarter or year. With every rolling budget, the customer will be able to run their balance sheet/income statement and cash flow for dynamic reporting.

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