Without question, the past few years from the pandemic have been one of the most turbulent for businesses. In this post, we’ll explore how businesses can overcome FP&A challenges and address them in the short and long term.
Due to the crisis, financial planning and analysis (FP&A) has increased company needs. To assist organizations in avoiding financial risks, FP&A experts must continually run scenarios and plan for contingencies. The home office atmosphere also made cross-departmental collaboration difficult.
The COVID-19 epidemic has changed how we operate in our organizations. But it has also highlighted the weaknesses of standard FP&A processes and presented new difficulties to the teams.
The FP&A function must adapt to changing needs and challenges. Here are some ways to overcome them.
Identify business drivers
Any organization will often have hundreds of business drivers. However, to monitor organizational performance, identify up to 20 main drivers. Keep in mind that new drivers may emerge along the way.
Organizations will benefit from monitoring these changing drivers to maintain a fast and dynamic planning process (and the organization should be ready to adapt it). It is also essential to identify external and internal causes, including business stakeholders.
Drivers should be chosen using the 20/80 Pareto principle, and they should be quantifiable and easily accessible.
Using FP&A solutions like Performance Canvas Financials, companies can easily integrate risk management into their planning process and run multiple scenarios against a specified set of critical business drivers.
Once we’ve decided on the drivers, we need to figure out how to get them from strategy to operations. A dynamic, systematic approach that keeps the company focused on the correct challenges and activities is required for effective strategic business planning. This implies that we must define or redefine the process with care.
Each organization will handle various drivers, but FP&A must push the envelope. In the long run, rethinking old drivers and finding new ones is a problem we face as a team.
Partner your FP&A Software with research
Historically, a large portion of the analysis was dependent on data derived from internal systems. Business executives want to know what problems others in their business or sector are facing due to the epidemic and how their larger ecosystem of partners and adjacent industries and sectors is managing and positioning itself for the long term.
Nowadays, the globe is more global than ever, and all sectors/industries are interconnected no matter how disparate. FP&A requires coordination with research to identify possible risks and opportunities and include them in the planning process.
Be more agile to get more accurate forecast updates
One of the most promising features of FP&A like PCF is rolling forecast. PCF can help update financials every month by developing a dynamic system. It’s necessary to comprehend the business not just from an overall standpoint but also to break it down on various levels of the firm.
Resilience is described as the ability to recover swiftly from adversity. Improving agility only enhances an organization’s resiliency in the long term. Advanced FP&A solutions can help improve an organization’s agility and business continuity, helping it respond to new drivers, which can help strengthen its competitive edge.
It is one of the essential long-term objectives because if we have an accurate Rolling Forecast, we will construct more consistent yearly planning than ever before.
Regardless of industry or business sector, FP&A professionals must face the future by taking proactive steps in ensuring their processes stay relevant to the changing times and take bolder steps to safeguard their data and protecting the interests of their stakeholders.
Performance Canvas Can Help
Performance Canvas provides you with reliable insights and forecasts to help you and your team make realistic business decisions. With PCF, you also get intelligent automation, which allows you to focus your efforts on refining your FP&A process and building stronger business connections with your partners, resulting in a more resilient company that is ready to win even in the face of a crisis.
Check out our website to learn more about how Performance Canvas Financials can help with your FP&A challenges today.