Businesses of all sizes continue to grapple with the economic impact of COVID-19 lockdowns. And while it remains to be seen whether vaccinations will have a lasting impact in driving immunity worldwide, business recovery is first and foremost on every CEO and CFO’s mind.
But picking up your business after financial losses from the pandemic isn’t as clear-cut as setting up shop again the following day. This is why having an agile financial planning process is essential to ensure your organization is well-prepared to pivot financially and has the means to bounce back quickly in the face of disruption. Having a financial plan that you can’t use on the spot is similar to not having one. If you want your business to waste no time gearing up for recovery, then it’s time to aim for improved agility in your financial planning to ensure business continuity.
An Agile Financial Approach Promotes Business Resilience
The most resilient companies that have managed to outlast their competitors all have one thing in common — the ability to adapt and respond to change. Industry leaders know how to anticipate business disruptors and prepare an agile approach, responding to market shifts seamlessly. In times of crisis, agility separates the movers and shakers from those who lie and wait and are slow to act when change comes knocking at the most inopportune time.
In a study on organizational agility, top companies were ten times more likely to respond to market shifts quickly, making it easier to ascertain that agility can be a precursor to good company performance. No matter where you look, agile companies have a more timely response and have a business continuity plan in place that can be triggered in the event of a crisis.
But how do you develop agility in your organization? It starts with reviewing your current processes, identifying what is not working or causing unnecessary delays, and establishing a more efficient system that makes it easy to deliver what is required the moment it is needed. Finance plays a central role in successful business transformation as its influence is steeped through every aspect and department within the organization. Finance teams work on the company’s budgeting and forecasting needs, which are crucial to clearing the path for faster recovery.
As much as 3 out of 4 executives have admitted to not being prepared for any business disruption. But over time, it has been found that adopting an agile process includes three processes: scenario planning, continuous planning, and rolling forecasts.
Agile Scenario Planning Informs Bausiness Owners to Anticipate Impact
Deloitte reports that most CFOs feel their business is feeling a high level of uncertainty. At the start of the pandemic, many companies have done more what-if scenario planning than ever before. This was to deal with sudden changes such as supply chain interruptions, new work-from-home plans, and their business as a whole thinking about what the new strategy will be.
But one thing is clear, using more advanced FP&A software can help organizations do more what-if-scenario analysis and be more agile in their approach to uncertainty.
Using assumptions to plan better can entail analyzing older budgets and is a lot better than not being prepared.
Using FP&A software like Performance Canvas can make it easy to access all your previous budgets and gather crucial insights to outline the best strategy going forward.
Agile Financial Planning Gets Rid of Obsolete Budgets
Preparing budgets take time, which is why agile businesses no longer stick to annual budget plans but do them in shorter periods, giving leaders a more accurate picture of how any change can impact business performance.
Many businesses are now adopting a continuous budget planning approach and effectively getting rid of the traditional annual budget planning that can demand much time from your finance department and prevents budget freezes.
Agile Rolling Forecasts Promotes Better Flexibility
Rolling forecasts are another critical toolkit in agile finance planning, helping organizations monitor business drivers to adapt their strategy as needed.
Rolling forecasts can also be an excellent way to anticipate business performance from the next 4-8 quarters so that business leaders can tailor their plan of action in order of priority.
Rolling forecasts also make it easy for business leaders to spot problem areas early on to make the necessary changes and make corrections before leading to more significant losses.
Start A More Agile Financial Planning Approach with Performance Canvas
In the long run, agile financial planning is a safer option for organizations. This allows them to make informed decisions that consider the reality of current events and market conditions, leading to better solutions that fast-track recovery.
These days, nothing is ever certain. The COVID-19 fight is far from over, and no economy is proven safe. The impact of trade wars between the US and China continues to affect the global market. Businesses will face the brunt of these changes, and many will not make it out. Business closures continue to be prevalent across all industries.
So don’t just sit and wait for the next potential business disruptor.
Get started on a more agile financial planning approach for your business. Explore what PCF can offer you today.