COVID-19 has turned traditional financial planning and budgeting processes upside down.
While global businesses continue to wrestle with economic uncertainty, your finance team needs to embrace a culture of agile, insightful planning — a transformation that entails adopting the right processes, systems, and tools. Only then can you react quickly to changing external factors and competently help guide your company through these unprecedented tentative times.
To foster the growth of agile finance planning and budgeting, consider four best practices CFOs can start championing in the new year:
Practice #1 – Rethink Your Business Scenarios
Scenario planning encourages you to visualize future endpoints in a range of conditions your business might face — from best case to varying levels of the present case to worst case. This type of planning can go a long way during these uncertain times by ensuring that everyone across your company stays in sync when pre-pandemic operations resume or, perhaps even more likely, when the new normal settles for your business.
Along with examining scenarios based on performance indicators like revenue and fixed and variable expenses, you should consider the key drivers that impact each case. These could be the arrival of the COVID-19 vaccine, the willingness of your customer base to return to normal, and social distancing. Most likely, you’ll find that several drivers remain interconnected.
If you haven’t already, now is the time to pressure-test your company’s strategic plans. Thoughtful scenario planning and stress-testing will go a long way toward helping your finance team and senior management to chart a successful path forward.
An enterprise performance management (EPM) system can significantly enhance your scenario planning and stress-testing efforts. Today’s EPM solutions remain designed to be used across the entire enterprise — capturing data that traverses your financial timeline and business scenarios. Meanwhile, the EPM system supports all your financial planning, budgeting, and forecasting on a single platform.
Practice #2 – Reset the Base to Zero
All businesses have been forced to rethink how they prepare budgets during the pandemic. Decisions about whether to shift spending have given way to must-do determinations on how and where to allocate dollars and resources. Previous expenditures such as travel and entertainment have substantially reduced or disappeared altogether, creating opportunities to reassess the base in other areas.
Instead of relying on stop-gap measures or waiting to revert to pre-COVID budgeting habits, now signifies the time for you to rigorously review spending across your company and adopt the practical and agile method of zero-based budgeting.
Practice #3 – Tap Analytics for Strategic Decision-Making
Data analytics offers the best avenue to gauge how the pandemic affects your business, budgeting, and forecasting. By understanding your data, you can identify areas of opportunity to increase profitability, decrease business waste, and effectively redirect your resources.
Don’t just rely on insights from traditional and governance-oriented reports generated in accounting, budgeting, and auditing. It’s vital for your finance team to embrace technology and analytics in its financial planning and budgeting processes. Digitizing and automating your current finance processes will not only improve the speed and accuracy of consolidating financial statements but also reduce reporting times and manual processing.
Evolving the function of finance through EPM software and other technology allows your finance team the opportunity to use advanced analytics, demand planning, and real-life forecasting methods to improve your company’s bottom line and better inform strategic business decisions.
Practice #4 – Empower Your Finance Team today
EPM and business intelligence technology-free your finance team from arduous, repetitive tasks. They’ll have more time to support your business as key advisors, and their employee satisfaction will increase with more innovative, fulfilling work.
If COVID-19 has taught us one thing, it’s to consider the vital importance of business agility. Now is the time to invest in technology and processes that will enable your company to turn on a dime, helping secure its financial performance with whatever uncertainty comes along. ProLytics can help your finance teams continue to succeed and plan ahead while working remotely.
Want to learn more about how your finance team can help keep your business on track for growth? See how they are key players in your business with Creating a Modern Finance Team.
ProLytics Consulting Group is a business and technology consulting firm that specializes in areas of Enterprise Performance Management and Financial Business Intelligence & Analytics. With decades of successful implementations, ProLytics understand and value that each company is unique. We are committed to working closely with each customer to to deliver value added technology solutions that solves their one-of-a-kind challenges.