Financial planning and analysis has become increasingly important in recent years. After the complexities that occurred in the past year, budgeting has been thrown out the window, leaders have found themselves working with unreliable information, and many question the economic landscape in the coming years.
This has required finance executives to rethink the way they are working. Shorter windows, increased flexibility, and higher risk have combined to make life harder for those trying to create and execute on strategy.
This is why leaders need to change the way they look at their planning. Planning can create value—but only if it delivers flexibility, control, and management over the future. According to CFO,
“Business leaders and CFOs want their FP&A teams to become stewards of value creation. FP&A should spend less time explaining the numbers, they say, and more time working with the business to manage them. As one finance executive told us, “I need an operating thought partner and not someone that is just keeping score.”
CFOs have recognized the need to transform FP&A for some time. Yet despite years of hard work redesigning processes and investing in new technology and data, many have not achieved the results they expected.”
But what should you know about empowering FP&A teams? How can you help people help the business? Here are five tips to make it work.
Don’t Ignore Buy-In
One of the biggest reasons any transformation or project fails is the lack of buy-in. Whether it’s from the people themselves or from the executives putting money into the project, businesses need to create a cultural and organizational commitment to commit. CFO notes that,
“Successful transformations require a strong partnership between finance and the business leaders from the start, rather than finance acting independently and then reporting back to the business on the results. That’s because the business must make the trade-offs on the future sources of value creation and the path and timing to get there.”
Redesign the Organization—Specialists over Generalists
Expertise is going to become more and more important. Currently, many organizations rely on generalists to handle FP&A. CFO notes that the bar will continue to rise as companies globalize and transform. Rather than focusing on improvement, the move could create a new organizational model built around the concept of a hub-and-spoke approach.
Teams will likely become smaller and more diverse—rather than a general team, you’ll have more small teams working together toward the end goal.
Facilitate Skills Development
With specialization driving value, you’re going to need to facilitate this, training and developing staff to handle the new landscape. CFO notes,
“To build the required skills, it’s critical to first dedicate some group of finance professionals to FP&A work and not split them between FP&A and accounting or other transactional work. The best finance leaders look beyond traditional skillsets for people with backgrounds in business or data science or analytics. They also invest in training and rotational programs.”
Enable Different Approaches to Work
Even with a specialized and well-trained team, you can’t overlook the way that people work and think. Innovation requires some risk tolerance, and a big bet on something might be better than a bunch of disparate, siloed, and risk-averse investments.
“As part of a major cost-reduction campaign, one large telecommunications firm took the opportunity for the FP&A function to reinvent itself. FP&A installed better tracking of performance management and initiatives, which improved accountability. It built a budgeting tool that improved key performance indicator (KPI) analysis and general reporting.”
Don’t Ignore Technology
With all the focus on changing people and processes, you can’t forget technology. People can only deliver so much value—especially when they’re wasting away on calculations and entry. The right technology can empower people and can be implemented relatively quickly.
“Waiting for a large core system upgrade will take many years and have questionable ROIs. Instead, it pays to take a phased approach using a portfolio of existing and new technology solutions. Cleaning data and addressing other data issues is a good start, after which FP&A can layer on more advanced tools and use of the cloud.”
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