Chief Finance Officers have traditionally depended on spreadsheets for budgeting and reporting. Arguably all accounting tasks can be done using MS Excel.
MS Excel serves a variety of purposes for finance personnel. It is used in tasks such as inventory management, forecasting, financial reporting, and financial consolidation to name a few. Aside from MS Excel doesn´t cost much, it is a tool that is so familiar to business users. Without a doubt, it is one of the life-changing inventions of our time.
However, Excel was never meant to handle very complex calculations in the way that finance people use it today. Many analysts link spreadsheets upon spreadsheets until it starts to get too big to handle and maintain.
Excel was also never meant to be a tool for team collaboration which is why many finance departments depending on excel encounter the problem of working on different versions. With the constant sending back and forth of the files, it becomes very hard to keep track of which one is the latest version especially when your colleagues make changes and forget to notify. It happens.
Adding to that, Excel spreadsheets do not foster confidentiality because you can only password protect an entire sheet. Other members of the team who have no business looking at certain figures will have unnecessary access because there just is no effective way to restrict access.
Then of course there is the problem of not being able to integrate various data sources or the problem of its incapability to perform multi-dimensional analytics. The list goes on.
Anyhow, you get the idea. It is not the ideal tool for CFOs who need real-time, relevant, and reliable insights. Certainly not the ideal tool for the FP&A analysts either who have to do the legwork of it all.
Financial Planning & Analysis is a complex yet extremely important process that has the potential to elevate any business to greater heights. As mentioned earlier, many finance departments rely on Excel spreadsheets in their FP&A which leads to frustration, long cycle times, inaccurate data, and ultimately, irrelevant outputs.
If you or your organization want to make business decisions using to up to date and actionable financial insights, excel spreadsheets won´t cut it.
FP&A tools become an indispensable tool if you are to drastically improve your entire FP&A process.
Why exactly is it important to adopt FP&A tools?
- Improve the entire FP&A process
Financial Planning and Analysis being a process that pierces through the entire organization comes with a lot of unexpected changes, goes through a lot of people which can lead to bottlenecks in the process, and It comes with tasks that are reliant on others to complete their side of things.
Having an FP&A tool like Performance Canvas by DSPanel ensures that you can easily identify bottlenecks with the use of a robust workflow. You can identify tasks, people responsible, and who are the ones holding up the process.
Good FP&A tools usually come with best practices in budgeting, planning, forecasting, reporting, and analysis that are already incorporated in the tool which will allow you to look at what you are doing, assess whether it is still effective, and then adopt these best practices within the FP&A tool.
- Shorten Budget Cycle time
One of the major criticisms of the FP&A output is that it is irrelevant by the time it is produced. Because it takes such a long time to compile information and to make sense out of them using manual spreadsheet ways, naturally by the time the FP&A team is done, many other factors have played in making the budgets or forecasts or plans unusable.
Budgets and plans are often criticized because many argue they are numbers that are arbitrarily decided and enforced by the finance department. Traditionally, this has been the case.
However, with the adoption of new FP&A tools that can foster enhanced collaboration and improved transparency, it becomes easier to involve frontline managers and let them be part of the discussion and planning. This will also in turn lead to improved accountability because this time everyone in the team was involved, no pointing fingers.
Likewise, if there is anyone that is holding up the completion of the process, it will be easier to see and call out.
- Analysts finally analyze
Lastly, it is rather shameful that finance departments who hire very smart people to analyze do very little analyzing because they are too busy fixing broken links, broken macros, trying to verify or crosscheck data. These things should not have to take so much time from people who are meant to analyze.
With the adoption of an FP&A tool, you automate the data collection and you automate many other accounting tasks. On top of that, FP&A tools like Performance Canvas have self-check mechanisms which removes doubt in the equation.
Finance analysts should really be analyzing for them to come up with actionable insights for the CFOs. CFOs as well should really have access to real-time, drillable information so that making decisions for them will be confident and effortless.
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