[ad_1]
Faced with the ever-present presence of Covid-19 and an ever-changing business environment, organizations are struggling to change the way they conduct strategic planning. Nic Dennis, ANZ Country Manager BOARD International, shares nine steps how leaders can improve their financial planning in a world of constant pandemics.
Accurate financial planning and analysis is essential for any business – it underpins the business decision-making process and supports strategic visions. Unfortunately, the methods traditionally used by businesses are becoming less effective. These methods struggle with the large number of variables operating in the market, ever-changing conditions, and the inability to clearly see what lies ahead.
To overcome this, businesses must fundamentally change their approach to financial planning and analysis. Rather than leaving it to the finance department, every part of the organization must be actively involved in the process.
Key steps to improve financial planning
When you consider organizations that have successfully developed their financial planning processes and capabilities, it is clear that there are a number of steps that need to be followed. The nine key steps include:
1. Start at the top
In order to achieve long-term and effective planning, the direction of change must come from the top. Top management must be convinced of the benefits the activity will bring and communicate them to employees throughout the organization. Be clear about what can be achieved when effective planning is done and ensure that everyone involved understands the difference their input and efforts will make.
2. Assess the quality of your data
Planning can only be as accurate as the data used to execute the process. Thoroughly review all data sources to ensure they are up-to-date and reflect current operating conditions and performance.
3. Encourage collaboration
Changing the way you do financial planning and analysis will take time. For this reason, it is important to stimulate cooperation between all stakeholders to ensure progress. In addition to maintaining motivation, this will ensure that any required changes in direction can be made quickly to keep the change on track.
4. Identify key drivers
Collaborate with key decision makers across the enterprise to understand and analyze all key business drivers. It will then be possible to create a strong connection between these and the organization’s goals. This will also allow for a deeper understanding of the financial impact of these drivers.
5. Create a schedule based on the driver
Once the key drivers are identified, create a solid plan based on them. This can be initially modeled in Excel or other toolkits and, once proven, implemented into an integrated planning methodology.
6. Deploy an integrated planning system
To ensure that the plan stays on track and can be easily evaluated, adopt an integrated planning platform. This platform will link strategic plans with business and operational planning. Aim for these plans to be integrated horizontally, vertically and across organizations.
7. Automate where possible
A key objective of developing an approach to financial planning and analysis is to enable the organization to better respond to changing conditions. To make this happen as quickly as possible, try to automate as many of the manual tasks performed by the finance team as possible. This frees up the team to focus on more value-added activities.
8. Do scenario planning
An age of uncertain market conditions has emphasized the importance of scenario planning. Move away from the single view of the future found in traditional planning and forecasting methods and use new driver-based models in collaboration with the business to develop multiple views of the future.
9. Focus on decision making
Once you have completed the development of the financial planning and analysis, return your attention to the task of decision making. Use an integrated planning system along with accurate data to create scenarios and determine the likely impact of a range of different decisions. In this way, better decisions and plans can be made that will have a positive impact on the overall operation.
It is highly likely that this age of uncertainty that exists in the business world will be here for a long time to come. By taking steps now to improve the way you plan financially, organizations will be much better positioned to survive and thrive in the months and years to come.
[ad_2]