Accurate financial planning, budgeting, and forecasting is essential for business leaders, as they make decisions in hopes of improving their business. But to most, accuracy in FP&A (financial planning and analysis) is a fallacy. Lack of insight into performance data, frequently changing markets, and ineffective communication and processes cause many business leaders to question accuracy and throw their hands up in frustration. Here are 5 things to keep in mind to quell your FP&A anxiety:
- Define KPIs. Identify the key drivers that indicate your business’ success. These KPIs should align with your organizational goals and support the needs of your long- and short-term business plans.
- Monitor performance on an ongoing basis. Rely on your business solutions to ensure that all key stakeholders are monitoring variances between budgets, forecasts, and actuals. They can then steer the business accordingly.
- Involve all key stakeholders. Budgeting and forecasting should not be top-down only. Employees throughout the organization, and sometimes outside, have insight into future performance and should be integrated.
- Take advantage of analytical functionality. Your organization can take the guesswork out of these processes by leveraging predictive analytics, simulations, and scenario analysis.
- Be agile. Volatile markets make forecasting difficult. Be prepared to quickly update plans to ensure they are based on current business conditions.
For more information about the tools used by Best-in-Class financial teams, read the full report: FP&A Accuracy is No Longer a Myth: How to Improve Financial Planning, Budgeting, and Forecasting.