At the end of 2019, organizations “finalized” their budgets only for 2020 to remind them that nothing is ever final. In the face of this kind of uncertainty, finance organizations need the ability to plan for the unforeseeable and steer the ship even when the course isn’t clear. Gordon Stuart, Unit4’s CFO, reveals the latest thinking on the role of Financial Planning and Analysis (FP&A) during COVID-19 and beyond.
The COVID-19 pandemic has thrown organizations of every kind into very unfamiliar territory. No-one knows what’s going to happen next, yet financial planners and analysts are still expected to advise their business colleagues about the future.
So how should financial professionals plan for the unknowable? The first step is to stop thinking and acting the way one used to. Instead, adopt mindsets, techniques and technologies that are better suited to unpredictable situations – and keep up to date on the latest approaches by learning from peers and trusted partners.
Dump your long-term plans
Getting hold of current data can be a nightmare if your systems are disjointed and use different formats. What one needs for real-time planning are integrated systems – FP&A that works seamlessly with ERP, HCM and other solutions – to give you a complete, up to date feed.
Model a wide range of scenarios
Traditional planning would have viewed the situation we’re currently living through as highly unlikely. This goes to show that you now need to prepare not just for variations of what’s likely to happen, but also different permutations of what seems unlikely to happen.
You also can’t afford long planning cycles any more. For some time, best practice has been moving towards continuous planning. Having the capability to work with much closer planning horizons is going to be critical to survival in the coming months.
Drop manual processes and outdated tools
Believe it or not, many organizations are still trying to manage with manual financial processes. Doing things by hand can not only slow down operations including financial, it also means analysts and planners have to wait for the data they need – and when they do get it, it’s often out of date.
Digitizing financial processes can have a revolutionary impact on cash flow and labor costs as well as improving the accuracy and timeliness of financial forecasts. Using FP&A software with built-in AI will speed up and improve the accuracy of your number crunching and leave you more time for interpretation and strategic thinking.
Now is the time to change
It may not feel like it, but now is precisely the time to make these changes. Uncertainty isn’t going to go away. So, the sooner you gain the ability to process transactions automatically and do scenario planning with live data, the better.
Making these changes can be surprisingly easy, even under current conditions. With the Software-as-a-Service model, while there are some up-front fees, there’s no capital purchase – you pay for the service when you start using it. And with today’s cloud architectures and homeworking technology, implementation projects can be conducted entirely remotely.