Financial planning is a must for every finance department and for any enterprise that wants to be in financial control. Unfortunately it is a challenging exercise that is often inefficient and ineffective. Budgeting and planning exercises take analytical and people skills, experience, and the help of technology to make it effective. To be successful, those responsible for financial planning must have insight into cost and revenue drivers, and be able to link their initiatives to the overall corporate business strategy.
In our experience, we have seen many issues related to failed financial planning initiatives. This blog post will highlight the top four offenders we commonly see our clients face.
Data – Data is king. Weak data management makes simple tasks such as accessing actuals or forecast scenarios extremely difficult. There is no guarantee that once you reach your data it will be accurate, so focus on data is critical.
Lack of Integrated Planning Tools – Although sophisticated technology solutions exist for budgeting and planning, many organizations are still running on Excel. However, spreadsheets are an ineffective way to integrate inputs from many users. Multiple scenarios are hard to run due to limitations of managing data by spreadsheets. Planners spend their time trying to link spreadsheets together or diagnose issues that crop up within their spreadsheets.
Inefficient Processes – If you do decide to fix your financial planning process, it’s important to decide exactly what you’re trying to accomplish:
- Get planning closer to your business strategy?
- Work with business units and departments to introduce drivers?
- Accomplish better variance reporting and analytics?
- Produce corporate roll-up of plan and what-if scenarios?
Unclear business purpose and alignment – As if there weren’t enough problems already, planners are often so frustrated they ask themselves and their team, “Why are we doing this?” Many corporations have not created a culture where accountability and transparency are expected. This undermines the efforts of financial planning teams whose reports may in turn affect the outcome of variable compensation.
Do any of these issues resonate with what you and your organization face? Stay tuned to our blog, and we will review four ‘must-haves’ that we believe are critical for success in financial planning initiatives and have the ability to make a huge impact on your efforts.