Corporate budgeting and planning as a process has changed drastically in the last decade. There are now higher expectations in terms of what is expected of the process and its outcome.
The same is true with the FP&A professionals. They are no longer just record keepers and cross checkers, they are now seen as partners for change.
The finance department lead by the CFO no longer just responds to the needs of the CEO, they also now have to consider and cater to the needs of all the decision makers in the organization including the front line managers and various divisions.
With the responsibilities of the FP&A team envolving so does corporate budgeting and planning. In order for the process to cope with change and to sustain success, it needs drastic changes and it needs revolutionizing.
So what are the 3 hottest trends in Corporate Budgeting and Planning these days?
- Rolling and Live forecasting
Corporate budgeting and planning is a process that pierces through the entire organization. It must connect various dots in the business so that any change in one aspect will immediately flow into its forecasts. It is now very important that changes flow seamlessly in real-time and that changing assumptions can be tested and accessed as needed.
Corporate budgeting and planning must now always be real-time, rolling, and easily modifiable for the finance user.
- Exception Planning
It is also now important and trendy for finance departments to look at factors in the plan that might prevent it from calculating accurately – this can be seasonal events or human factors.
Machine learning, deep dive analytics, and other statistical means are now employed in order to remove biases in forecasts or cases of extreme optimism. This way variances will be in acceptable levels and efforts are not unnecessarily duplicated.
- Scenario Analysis
In order for a business to be agile, it is now crucial and trendy to perform multiple scenario analysis. Decisions undertaken by managers or other decision makers must be backed by continuous, real-time forecasts and through performance of multiple scenario analysis.
Given the high level of uncertainty that exists in the market today, it is trendy as it is important to consider alternative outcomes and its impact on the business so that risks are spotted early on in the horizon and so that decisions are as strategic as possible.
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