In current market conditions flexibility is a must.
Unfortunately, many organisations are stuck using traditional methods for their financial planning.
This includes using spreadsheets and creating a once a year static plan, which is poorly communicated throughout the company.
Planning in such a way has significant risks.
Financial Planning Risks
Your company is most likely operating in a disruptive market.
So, what do you do when there is a disruption?
Firstly, you must update your plan to take this market change into account.
To do this you need data. However, how up to date is the data you’re using? Do you even know?
Incorporating data that is out of date into your new financial plan leads to inaccurate financial forecasts and budgets.
This inaccuracy means there is no way to understand what the key drivers in your business are.
And, if you don’t understand the key drivers, how do you know what to do to impact future business performance?
The answer is, you can’t.
Therefore, since market volatility is here to stay, organisations must embrace a new way to plan.
They have to get rid of their spreadsheets and integrate a powerful financial planning solution into their business.
How Industry Leaders Are Planning
Companies that have done this well understand the importance of agility and accuracy in their financial planning.
As this is the only way to really gain a holistic view of what drives success in their business and how to improve performance.
This starts with putting the right tools in the hands of your leaders and team members.
Research from Aberdeen Group found that organisations that incorporate both enterprise performance management (EPM) solutions and business intelligence (BI) analytical solutions together have the most agility.
A key part of this is the ability to source real time internal and external data to create accurate forecasts, budgets and plans.
EPM and BI software also facilitate collaboration and allow financial planning to happen organisation-wide instead of in silos.
This “connectedness” is empowering for leaders and users throughout the company.
Additionally, if the software is cloud-based, global organisations can be connected, regardless of where their staff is based, and work together to develop and implement plans.
Responding to Market Disruptions
These solutions also make it fast and accurate to process data and create budgets and forecasts, so businesses can confidently respond to market changes as they happen.
What-if analysis takes this a step further, allowing the testing of any number of scenarios to see how potential market disruptions will affect performance and how your response may play out.
Ultimately, this shift in the way financial planning must be done is changing of the role of the CFO.
Instead of being largely reactionary, CFOs can now take a proactive approach to improving business performance and confidently navigate their organisation through an ever-changing, volatile market.
Overall, traditional financial planning is too risky for organisations.
In order to compete in the current market environment, they must be agile and confident in the accuracy of the budgets, forecasts and plans they are creating.
These plans must be able to change in response to market disruption and be developed and visible throughout the company, including across countries.
With the right EPM and BI solutions, businesses can fully understand their drivers and how to positively impact performance.
Enabling CFOs to take on the market and proactively lead their organisation’s success.