In 2013, The Global Treasurer published an article titled “A New Era for FP&A”. The focus was on business demands after the 2008 financial crisis, and how FP&A can help your business to manage the changing economy.
Seven years later, this proves useful to us again, and now, we look at the same challenges in the same way with the same solutions, just a different crisis.
“Some
organisations have not had enough time to re-align their cultures, systems and
processes to suit the ‘new normal’ conditions, but they should as most chief
financial officers (CFOs) and other finance professionals know that the ability
to forecast results is the number one concern of modern business.”
– The Global Treasurer
With the current status of financial planning and analytics in South African business, it’s prudent to reinforce the negative impact that spreadsheets, a lonely ERP, and hindsight-planning have on your business.
The negative impact of
poor financial planning and analytics:
- Time and money is wasted, and in times like these, we can ill afford to lose money on such integral processes. Skills are misdirected to grunt work, instead of growth-focused intelligence, and the insight available versus the time and resources required is hardly worth it.
- Financial and business objectives are secondary to “getting it done”, and the mismatch between your outcomes and goals has a considerable impact on your ability to achieve your objectives.
- Cross-purpose inter-departmental collaboration is unachievable. This means that your departments, all working to their own ends, are not singularly focused on the same strategy, KPIs and growth factors that will help your business to survive or thrive.
- Reduced strategic cross-business capability
With varying KPIs and non-unified targets, business departments are focused on individual achievements instead of overall business achievements. The lack of clarity, transparency, and useful insights, the chances of cross-pollination are drastically reduced.
How FP&A drives a full business solution
FP&A reaches areas in your business that are otherwise on their own and consolidates cross-organisational data into a full view of your operational, financial, and management performance and planning.
The 10 benefits of
FP&A to all business areas
- Forecasting and planning
The obvious benefit to the business is the ability to accurately forecast and plan your actions based on the number-crunching functions of the tool.
- Build awareness
FP&A builds organisational awareness and understanding of how each department impacts the overall strategy of the company, and what their critical role is in the growth and efficiency of the business.
- Resource allocation
FP&A can assist in the appropriate and effective resource allocation to ensure that the business provides a supportive framework for departmental drivers.
- Future opportunities
FP&A also allows you to predict potential revenue streams across all areas, effectively and accurately, for future growth, cash flow and budgets, and other strategy-focused opportunities.
- Support for initiatives
In doing the above, your financial planning and analytics tools provide a mechanism to support operational and financial processes.
- Communication, delivery, success
Alignment of financial and operational processes improves the communication and delivery between these departments and ensures that all required deliverables are provided between the two areas for the other to successfully execute their plans and products.
- Projects, initiatives, and programs
Simplifies coordination of projects, business initiatives, and programs (company-wide) in a structured, goal-driven manner. In this vein, your finance, operations, sales, marketing, IT and projects teams can be directed in their role in every action and provide the correct information for each step of the process.
- Clarity and enablement
With all of the above, your strategic drivers are made clear and achievable by each department for a more cohesive pull toward your business goals.
- From strategy to actionable plans
FP&A data and analytics help you to translate your strategy into practical, realistic, actionable plans with a tighter, more cohesive approach.
- Shareholder and business value
From the root of FP&A to the business and shareholder value provided, your delivery and management can support a successful and productive, satisfying end-result to your high-ups.
For 2021 and going forward, it’s a good idea to assess where your business stands in terms of strategic achievements, and consider the impact of the tools that promote your strategic growth and business success.
Contact Cortell to get the Financial Planning and Operational Performance Management you need to make better decisions, faster.