The future is never predictable. The past few years have proven that many times over. Corporate America continues to recover from the 2020 pandemic, seeking to adapt its many lessons into future strategies. 

As a controller, CFO, or other financial leader, you play a role in financial planning and analysis (FP&A) for your organization. But how do you accomplish this task in the face of so much uncertainty?

Here are some ways that organizations are achieving resilience in their FP&A functions and preparing for the next “new normal.”

Scenario Planning

One of the best ways to build resilience is to plan ahead. It’s important to visualize the specific events that your organization could conceivably face. After all, no one could have predicted that the American economy could be brought to a halt by a viral outbreak. 

How will your organization handle similar scenarios? What will you do if you face a staffing crisis? How will you respond if the economy comes to a sudden halt?

Visualizing these scenarios through scenario planning can help you prepare for the worst-case scenario as well as reflect on how these events might impact your company’s cash flow, overhead costs, and supply-and-demand ratios. 

Your FP&A functions can therefore be augmented by having contingency plans for every imaginable scenario, keeping you above water even if the tide rolls in unexpectedly.

Leveraging Data Analytics

The best plans are made with the best data. Leveraging data analytics helps you analyze your historical data, identifying patterns that can help you reliably predict future cash flow and other core business metrics.

The right software can integrate data from previously disconnected segments of your organization, providing end-to-end visibility of your business processes. Best of all, you’ll have real-time data that lets you check the pulse of your company at any given moment — a must-have for times when you have to adapt to changing conditions.

Adopting Cloud-Based Tools

For years, organizations have been shifting to cloud-based technology rather than their own internal servers. This allows company leadership to access company data from anywhere, interact with customers, and make strategic decisions on the fly.

All of that matters when facing a future full of uncertainty. Cloud-based software solutions can keep your organization connected and aware of what’s happening internally, allowing you to make strategic decisions that adapt to unforeseen circumstances.

Artificial Intelligence (AI) and Machine Learning

As more companies adopt software powered by artificial intelligence (AI), the corporate world will gain the ability to analyze data and identify patterns more quickly than the human mind could dare to imagine.

How does this help your FP&A processes in particular? AI-powered software can analyze your historic data, providing reliable financial projections for the future. This gives your organization a better understanding of future revenue, cash flow, and other key metrics. 

And with machine learning, these same tools can adapt to shifting conditions to provide updated analysis even if the future brings a lot of economic volatility.

Cost Optimization Methods

For most modern businesses, the “worst-case scenario” involves a loss of revenue or a loss of customers — or both. The COVID-19 pandemic showed America that to a certain extent, this loss was inevitable. But that doesn’t mean that your business can’t remain resilient.

Cost optimization means adjusting your core costs to ensure that you remain profitable even in the face of external challenges. For example, adjusting your contracts with vendors, suppliers, or wholesalers can minimize overhead costs. 

Likewise, introducing automation in your core business processes can slash costs and even improve your company’s speed and efficiency.

Adapt Your Supply Chain

In recent years, supply chain disruptions have created major challenges for businesses in every industry. Resilient companies must adapt their FP&A processes to account for these disruptions, as well as find ways to adapt their distribution strategy to prevent these issues from short-circuiting their revenue streams.

Companies can leverage automated tools to streamline their supply chain. This can provide real-time visibility of your inventory and automate core processes to accelerate your distribution and delivery speed. 

The result of this automation is twofold: it cuts costs associated with shipping delays and inventory mismanagement as well as speeds up your shipping time.

The Secret to Resilience

The most important thing to remember is that true strength isn’t about hardening your defenses against the unpredictable. Instead, it’s about remaining flexible, learning to adapt to changing circumstances, and coming out the other side even stronger than before.

But don’t forget: your competitors are refining their strategies as well. Staying flexible can help you adapt to challenges from the economy as a whole, and it can also help you adapt to competitive pressures. 

In the end, these steps can make you a better financial leader, allowing you to provide planning and guidance no matter what circumstances you face.

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