Carlson Thought Leadership in Finance & Technology

How to Bring Your Company’s FP&A to a Whole New Level

March 29, 2018 / by Lauren Strohmeier

Having financial foresight is crucial to the success of your company. By leveraging best practices in financial planning and analysis (FP&A), you will gain valuable insights into performance that will guide your business in the right direction. You will also develop informed and effective strategies that position your company for long-term success.

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*A holistic picture of company performance

Firstly, become a driver-based organization. It’s important to identify the drivers that have a real impact on business. Which factors most contribute to cash flow and growth? Determine the metrics that merit your closest attention. Prioritizing key static and dynamic drivers is essential to boosting profitability.

By finding linkages between drivers and performance, you will drill down to the fundamental causes of events. You will gain perspectives that lead to better decisions. Now that you’re more informed, you will be able to develop winning strategies, improve collaboration, and get everyone in sync. It pays to be proactive, and driver-based budgeting enables active planning that gives your company a forward-thinking view. All in all, you will gain a holistic picture of company performance.

Identifying drivers also allows you to define your key performance indicators (KPIs). What should you calculate to measure your company’s performance? Select the most salient and strategic KPIs.

Financial assumptions are another critical part of your business plan. These assumptions allow you to make educated projections about what will happen. With an eye to the future, you can develop a course of action that makes your goals a reality.

For financial assumptions, leverage calculations in your budgeting system so that you can update values in real-time and adjust to changing conditions when the need arises. This gives you the capability to evaluate various scenarios and their respective outcomes. Your drivers should show a waterfall effect within associated models and give you a clear picture of what’s ahead.

Define and Present KPIs

Total Company Revenue*The right KPIs are aligned with your business objectives

Because KPIs are a great gauge of company performance, it’s vital to choose the right ones. KPIs are eye-openers, providing helpful information on where to focus your attention. To define them, examine your financial statements. Identify your top 20% general ledger (GL) accounts. Then, analyze the building blocks of those accounts until you get to the core and begin talking about non-financial metrics.

With Adaptive Insights Business Planning Cloud, the leading corporate performance management solution, you can access both financial and non-financial data. You can examine trends by comparing historic numbers with the forecast. Furthermore, you can adjust forecast numbers based on specific conditions. Want to discover patterns? Adaptive Insights is able to display numbers as visually-appealing charts, graphs, and diagrams; ultimately, giving you a clean, forward-looking picture.

Manage a Cadence for Rolling Forecasts

With rolling forecasts, your company can stay agile. They allow you to use KPIs in a way that leads to maximum efficiency and high performance.

When creating rolling forecasts, think strategically. Consider what you’re aiming to accomplish. What do you want to project? How often should you create them?

For most companies, conducting a quarterly or monthly forecast is standard. Think quality over frequency. Proactively monitoring the numbers on a regular basis will give you more accurate foresight. How far ahead should you look? That depends on the dynamism of your company and market. Most rolling forecasts project out at least one year, but may go even further out.

To gather relevant information, compile actuals from sales and revenue applications, such as Salesforce. Because rolling forecasts are an iterative process, integration is a tremendous time-saver. With Adaptive Insights, you are able to integrate any type of financial data into the system quickly so you can reforecast.  At Carlson, many of our clients use the DataBlend cloud integration platform to pull sales and pipeline data into Adaptive Insights. Automating this process not only saves times but eliminates the silos between finance and sales teams.

DataBlend - 4*The DataBlend cloud integration platform pulls data into Adaptive Insights

Create Board Reports that Inform and Impress

Creating a compelling board report is all about content and presentation. To resonate with your audience, reports should catch the eye, inform, and impress. Effective board reporting helps people think differently. It also enables you to present your most strategic KPIs. Because reporting is key, create a methodology to achieve fast efficiency through integration.

Board reporting has its challenges. It can be time-intensive, requiring days of effort to update. Manually updated spreadsheets are prone to errors. That’s where Adaptive Insights’ OfficeConnect product comes to the rescue. OfficeConnect streamlines and automates board reporting using accurate charts, graphs, and diagrams that give a clear picture of business performance.  Updates to board reports usually just take a click of a button.

Leverage Cloud Technologies

ERP systems

*Adopt a best-in-class ERP systems strategy

Enter Cloud technologies. The benefits of moving FP&A to the Cloud are numerous. You will gain real-time, 24x7 visibility into company performance. Imagine being able to access company information anytime, anywhere. Now you can, thanks to built-for-the-Cloud financial systems like Adaptive Insights at your service.

Additionally, adopting a best-in-class systems strategy saves you a lot of time. It automates and integrates for maximum efficiency. It’s flexible and scalable. As your company scales, so does the volume of data and information you need to process and digest. As you grow, spreadsheet-based budgeting, forecasting and reporting processes begin to break down. Streamlining performance management gives you peace of mind.

Ultimately, moving to the Cloud pays off immensely. You will reap greater financial rewards that make your business goals attainable. To learn more best practices in FP&A, tune into these practical steps.

Ready to bring your company’s FP&A to a whole new level? Transform your key finance functions by contacting us for a personalized demo.

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