Leveraging FP&A for Growth

There’s nothing quite as uncomfortable as having to change when you don’t want to.

Or perhaps to a lesser extent of discomfort, having to change faster than you’d like to. In March and April, many companies wavered as they weighed the possibilities of what might transpire in the coming months of Summer 2020. Yet, in the recent Fall months, they’ve increasingly executed upon what they believed would be their new realities. I’ve been saying since the beginning of this craziness that I hope doesn’t last long. But I’ve been telling company leadership all along: “plan like it may last forever”. That doesn’t mean it will, but it means you’re not anxiously awaiting a due date for the old way to be restored. If there’s a key mindset I’ve observed over the years of working with leaders and businesses, it’s that the most successful ones never really want to reach their goals and be done. They don’t seek finality. They never want momentum to stop because then they risk becoming complacent. They persevere and they persist and they bypass arriving.

We probably need to be updating our plans more frequently, now more than ever, because the future is so much more uncertain. We should plan and adapt continuously, and that applies to our businesses as well as our personal lives. Planning shouldn’t be a once-in-a-while event; planning should be continuous. When it comes to continuous planning in an organizational context, financial planning comes second. Mindset shifts come first. Here’s why:

The most important is a cultural shift. Making sure that people understand that they’re no longer going to be acting like a small entrepreneurial business they’re going to be acting like a much more mature connected company. For a lot of small businesses that’s a major shift and it needs to be addressed and nurtured constantly. I always say to companies that are embarking upon that path that a lot of the change or a lot of the language needs to come from the top. Certainly the CFO, but also middle-level managers as well who have bought in to the change and bought into the processes. A second area is a mindset shift of recognizing what is possible. That in many ways it’s going to be better than a lot of the frustrations and disconnects that existed when the business was a lot smaller just starting out. Every company has pain, no matter what size, and experiences consequences of that pain. But always realize that it doesn’t always have to be that way. No company is perfect, but all can be a whole lot better.

And then third, I always say to companies that are looking to expand: technology is not a fix all to all of the problems. If you bring in software, it’s going to address some of those pains and problems. It’s going to allow the company to operate a whole lot more smoothly. But in some cases, if processes aren’t deliberately crafted and functioning as intended, technology implementations it may make the organization even more splintered. It’s really important to understand and redefine what your processes are and make sure that they’re working the right way so that when a platform comes in those processes can be well migrated. There’s often more that needs to be done on the front-end of planning than many people and companies realize.

Planning is part of life. Those of us who are futurists get energized by the possibilities that await us. We need to be intentional about what we do on the path to where we are going. In times like these, it’s of the utmost importance. Plan fully, plan often.

The most common responses to the question I posed in my survey reveal that tightening up some organizational processes and procedures may be all that is needed to allow FP&A teams to do their jobs more effectively.

See if any of these ring true for your organization. If so, I’d be happy to talk with you more about what challenges your business is facing when it comes to getting the most impact out of your FP&A team.

1. Time-consuming processes don’t allow for time to be spent on what really matters.

It’s necessary to have some processes in place to ensure that information doesn’t get lost and that tasks get done in an orderly manner. However, too many processes, especially time-consuming ones that take away from FP&A’s primary function, can lead to bottlenecks.

The FP&As in my network expressed that they’re spending way too much time in meetings and managing the mechanics of updating and rolling forward models for new data. This leaves them less time to focus on analysis and gaining insights that can help them provide more value to the business.

2. Inability to react quickly

Unfortunately, the first complaint leads to this second one, which is an inability to react quickly because there is a lack of driver-based planning. When FP&As are focused on time-consuming processes and activities, they are unable to plan. And when they can’t plan, they lose the ability to react quickly.

3. Disconnected data and version-control issues that lead to inefficiencies

This next problem is one of growing pains. As companies grow in size, reach, and complexity, they start installing new software platforms, hiring new people, and integrating new processes. As a result, FP&A teams end up with disconnected data and version control issues because there isn’t a single source of truth.

4. Ineffective tools and processes that reduce FP&A accuracy

Of course, because much of what FP&A does is based on data, having disconnected data leads to inefficiencies and other problems. Many great tools are available to help FP&As and organizations as a whole gain valuable business insights.

However, there isn’t any single tool that can provide all the insights a company needs. So, it’s important for organizations to ensure all their tools and processes are integrated as much as possible so that FP&A can access accurate data quickly and effectively.

5. Lack of organizational partnership approach

FP&A is not a “back office” support function like accounting can be. Instead, it needs to operate holistically in partnership with departments across the business. This challenge requires a fundamental shift in how the organization approaches the FP&A function and will require organizational leaders to acknowledge the critical role that FP&A plays in building and developing a business strategy.

6. Poor forecast performance measurability and accountability

It’s important for FP&A to be involved in forecasting and projections across the business. Those forecasts and projections should involve input and insight from departmental leaders. Without a culture that prioritizes embedded accountability, FP&A teams will likely experience poor forecast performance measurability and accountability.

7. Lack of effective scenario planning and ability to act quickly

This encompasses and builds on the challenges outlined above. When issues such as time-consuming processes, disconnected data issues, and ineffective tools are not addressed, the company is not positioned to handle what can happen in the future. This is why a lack of effective scenario planning negatively impacts FP&A’s ability to act quickly.

8. Lack of upskilling opportunities

Across organizations of all sizes, it’s becoming apparent that there is a need for professionals who possess not only financial skills but also analytical, strategic, critical thinking, and organizational skills.

Many FP&As are frustrated that their company does not offer or provide opportunities for them to upskill their talents so they can bring more to their roles and add more value to the organization.

Leveraging FP&A for Growth

There’s nothing quite as uncomfortable as having to change when you don’t want to.

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Author: Carl Seidman

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