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FP&A Leaders’ Series: Rina Kacker Highlights the Crucial Role of Business Partnership in FP&A

As businesses continue to navigate an increasingly complex financial landscape, the role of Financial Planning and Analysis (FP&A) leaders becomes more critical. As part of our FP&A Leaders Series, we recently sat down with Rina Kacker, an experienced finance professional with a diverse background spanning tech, e-commerce, SaaS, EdTech, and biotech. She shared valuable insights into the evolving role of FP&A and finance business partnership.

Here, we explore key takeaways from the conversation that underscore the importance of effective business partnership in FP&A.

Defining Business Partnership in FP&A

According to Kacker, business partnership in FP&A goes beyond mere financial oversight. It involves optimizing the use of company resources—cash, headcount, facilities, and IT infrastructure—to achieve both current and future goals. This approach requires FP&A leaders to act as gatekeepers of discipline, ensuring that resources are utilized effectively without hindering the company’s progress.

"Business partnering brings all of this in balance and saves resources for the long run," Kacker noted. This perspective highlights the need for FP&A to be seen not just as a cost center but as a strategic arm of the organization. 

Overcoming Challenges in FP&A Business Partnership

One of the primary challenges in FP&A business partnership is gaining alignment and buy-in from the C-suite. Kacker emphasized the importance of having the support of top executives to ensure that FP&A initiatives are embraced across the organization. She pointed out that without this alignment, FP&A efforts can be sidelined, leading to suboptimal decision-making.

In her experience, Kacker found that one effective strategy is to ensure FP&A has a seat at the table during key departmental meetings. "FP&A should have a seat at the table and should have a small segment for any finance-related budget," she stated. This involvement allows FP&A to provide timely financial insights and ensures that all departments are aligned with the company’s financial strategy. 

Best Practices for Building Alignment

Kacker shared several best practices for building alignment across departments:

1. Regular Communication: FP&A should be actively involved in departmental meetings and keep all stakeholders informed of financial updates and forecasts.
2. Education and Collaboration: Helping non-finance leaders understand financial reports and metrics fosters better collaboration. Simplifying financial information and providing context can bridge knowledge gaps. Additionally, Kacker emphasized the need for Finance to understand what's top of mind for their business partners and establish a collaborative cadence. “Ensure the operational numbers come from the organization you're supporting, not just finance. This fosters ownership and alignment.“ ‍
3. Transparent Processes: Clearly communicating the reasons behind budget variances and involving departments in the budgeting process can reduce friction and promote a sense of ownership. Kacker stated: “It's important to communicate that being over or under budget isn't inherently good or bad—it depends on the reasons and allows for course correction.” 

Navigating Industry-Specific Challenges

Kacker’s diverse experience across industries provided her with a unique perspective on the specific challenges faced by FP&A in different sectors. For instance, in biotech, managing large, multi-year contracts with finite cash runways is crucial. Conversely, in SaaS, navigating complex hosting service agreements and commission structures requires meticulous planning.

Regardless of the industry, Kacker emphasized the importance of flexibility and adaptability. FP&A leaders must be prepared to adjust strategies based on evolving business needs and external factors.

Leveraging Technology and Data

The interview also touched on the challenges posed by slow processes and lack of real-time data. Kacker highlighted the importance of leveraging technology to improve efficiency. Implementing robust planning systems, such as Stratify’s FP&A software, allows FP&A teams to provide real-time financial insights and reduce reliance on outdated reporting methods. 

Developing Essential Skills for FP&A Leaders

To be effective business partners, FP&A professionals need to develop a range of skills. Kacker stressed the importance of being able to identify key areas of focus within the organization and establishing strong relationships with business partners. 

Additionally, simplifying complex financial information and using planning systems to enhance transparency are critical skills for modern FP&A leaders.

 "Stay close to your business partner, establish yourself as a collaborator, and ensure the numbers come from the organization you're supporting," Kacker recommends. 

In this article, top 20 FP&A hard and soft skills to master drive home points in our discussion.

Empowering FP&A for Strategic Impact

The insights shared by Rina Kacker underscore the important but often overlooked role that FP&A plays in driving business decisions and truly becoming the beating heart of the organization. 

By fostering strong business partnerships, gaining alignment across departments, and leveraging technology, FP&A leaders can be the catalysts that ensure their organizations are well-positioned for long-term success. 

As Kacker put it, "FP&A should feel empowered to take their insights straight up to leadership.  We see trends early and can propose proactive measures to mitigate risks. It's about using our unique cross-departmental lens to create awareness and drive strategic decision-making.”

Embracing these best practices and fostering a culture of collaboration and transparency is key to unlocking the full potential of the financial planning and analysis role.

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In recent years, corporate financial planning and analysis (FP&A) teams have taken on an increasingly strategic role due to volatile markets, global economic uncertainties, and the increasing complexity of business operations. FP&A provides a structured approach to financial management, ensuring that businesses are prepared to meet their financial goals and navigate uncertainties.

The collaboration between finance business partners and their stakeholders plays a big role in FP&A's ability to meet the new requirements of the job. According to FP&A expert Christian Wattig, ‍

“The goal of a finance business partner is to become a strategic advisor to the business, driving sustainable growth and profitability.” 

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Finance business partners are often supporting numerous stakeholders, including heads of business units or functional leaders such as the organization’s sales and marketing leaders.

In our recent study to quantify the state of finance business partnership, we surveyed over 150 FP&A leaders in the U.S. to shed light on the complexities of stakeholder collaboration.

Collaboration is difficult

41% of FP&A leaders believe plan accuracy could be improved through more effective stakeholder collaboration.

Today, collaboration is difficult and time-consuming according to our survey respondents. In fact, only 26% involve stakeholders in both annual planning and reforecast processes. It’s worse for teams that haven’t invested in modern FP&A tech. Only 20% of teams that plan in spreadsheets or legacy tools involve stakeholders in both annual planning and forecasting.

Data challenges block collaboration and plan accuracy

While lack of stakeholder engagement was cited by many, it’s clear that poor data management is seen as the biggest obstacle to collaboration.

These data-related obstacles fall into three categories:

1. Lack of Real-Time Data

FP&A leaders need data, metrics, and KPIs to enhance decision-making, improve forecasting accuracy, and drive business agility, with 24.84% of leaders agreeing that lack of real-time data blocks collaboration. We’ve identified three key areas on how real-time data supports FP&A leaders:

• Effective Performance Monitoring: Continuous monitoring of performance metrics and KPIs to improve timely interventions when performance deviates from targets and goal alignment.
• ‍Enhanced Risk Management: Better understanding of potential risks and their impacts. This may include early indications of overspending, hiring that is off-track, and lower cost of acquisition. These are all signs that an organization is not on plan.
• Optimized Resource Allocation: Assurance that resources are allocated where they are most needed and most effective.

2. Manual Preparation and Manipulation of Data

This process is incredibly time-consuming, often diverting valuable time and resources from more strategic tasks that could add greater value to the business. Collecting data from multiple sources manually can take a significant amount of time, especially if the data is stored in disparate systems.

Human error is an inherent risk in manual data entry, and simple mistakes can significantly impact the quality of the data. Manipulation of data using complex formulas in spreadsheets increases the likelihood of errors that might go unnoticed until they cause substantial problems.

Our survey findings revealed that 18.3% of FP&A leaders say manual preparation and manipulation of data creates inefficiencies in plan accuracy. This points to the need for modern technology to address this challenge.

3. Data Hygiene: Lack of 'Source of Truth' Data

Effective strategic finance hinges on extracting intelligence and insights from data silos. Data hygiene is a common struggle for FP&A leaders, with 16.34% of survey respondents (and poor data quality) hindering laboration. Poor plan accuracy follows in tow.
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FP&A software can help

Accurate data begins with effective technology that supports data management. Integrating data sources enhances accuracy, consistency, efficiency, and overall data integrity. Establishing a single source of truth for financial data across all teams boosts FP&A's ability to collaboration with the business.

‍When seeking the best FP&A software for your business, it is important to consider how well it can help you address data challenges. FP&A software like Stratify can help you with real-time, seamless integrations, master data management, automated reports, stakeholder collaboration, and more!

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‍“With Stratify, the system updates automatically for us. Everyone sees the same accurate, real-time data together in one place at the same time.” - Tina Lai, Finance Manager, Spotnana

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Spend less time on data-related challenges and more time creating effective finance business partnership.

Most FP&A teams struggle to find time for business partnership, but research shows that teams using legacy planning applications are struggling more. This is holding back the business, and could even be career-limiting!  

Driven by our belief that finance needs to be the proactive driver of business strategy, we set out to survey 150+ FP&A leaders in the U.S. to uncover the reasons why they lack time for business partnership. 

We discovered that FP&A teams who work with older technology (like legacy planning tools or spreadsheets) struggle more with manual tasks – at the expense of high-value work. When asked "Does inadequate technology limit your ability to impact the business?", 42% of FP&A leaders said "Yes." However, that number soared to 71% for those working primarily in spreadsheets.

FP&A has the potential to create incredible value for the business. Standing at the intersection of finance and operations, FP&A can understand the performance drivers and challenges of each department, and the way that one team’s performance affects others. Without the data and time to develop this insight, finance professionals are blocked from effective business partnership and the more meaningful contributions they want to make. 

‍Unfortunately, the data shows that legacy FP&A tools (or relying primarily on spreadsheets) hurt not just FP&A leaders – but the whole business – in three big ways.

Legacy FP&A tools hinder potential  

1. Slow processes -- an endless cycle of manual work 

Relying on legacy tools adds days of extra work to FP&A processes. 

• Only 8% of FP&A teams surveyed can produce a BvA within 3 days. 43% require 6 days or more.
• 64% of FP&A teams still do headcount reconciliation manually. 

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2. Lack of FP&A agility holds the business back 

FP&A teams saddled with old technology are planning without the essential operational insights they need. Earlier generations of FP&A software integrate primarily with an ERP to pull financial data into the plans. This yields one-dimensional plans and forecasts with limited value for the current demands and trends in corporate finance. 

The modern mandate for FP&A teams requires operational data. Legacy tools just aren’t pulling that data into plans and forecasts, so analysts are stuck doing the data gathering and manipulation manually in spreadsheets. It’s tedious, error-prone, and wastes valuable time. 

Our survey findings definitely revealed the agility limitations of older generations of FP&A tools: 

FP&A leaders who say they “definitely need a consultant, internal admin, or specialist to make changes to underlying logic or structure of my planning model” are twice as likely to be using older gen planning/consolidation/BI systems (34%) compared to all other applications (7% -17%).

If analysts can’t be proactive and adjust their own models, strategic decisions are delayed and the organization is blocked from taking action when strategic opportunities arise. 
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3. Legacy FP&A tools may limit the FP&A leader’s career

FP&A leaders drowning in manual work don’t have the time to spend embedded in other business units. Processing data and reporting takes forever in legacy tools. These teams are stuck in 2-week reporting processes with no leftover time for other strategic activities. 

But the most successful FP&A leaders prioritize business partnership. Finance business partners engage with stakeholders to link financial plans intrinsically with the company's overarching goals. Unfortunately, only 20% of teams that plan in spreadsheets or legacy tools involve stakeholders in both annual planning and forecasting. 

As one FP&A leader said, “I was shocked at how much easier it can be with modern FP&A software and automation to help. It enables me to do higher-level tasks.” 

Don’t let legacy tools be the reason your FP&A passion stagnates. Find the organization that will give you the tools you need to thrive. 

Break down barriers to finance business partnership

FP&A expert Christian Wattig and Brian Camposano, Stratify CEO, dove into the data from a new survey of mid-market FP&A leaders in this recorded webinar, sharing practical ways to address the top roadblocks to business partnership with skills and technology. They cover:

✔  Insights from 150+ FP&A leaders - Discover the common blockers and success factors. See how you compare.

✔  How to leverage finance skills to level up and be an effective business partner.

✔  How to use new technology to reclaim time and collaborate with stakeholders.

✔ Take action and hear expert answers to top questions from finance leaders like you.

Imagine you're trying to navigate to a treasure on a map. Just knowing the distance and the temperature (two variables that will impact how you plan for the journey) wouldn't be enough, right? You'd also need to consider other aspects, like:

• Direction: Is it north, south, east, or west? (What are the metrics for our organization?)
• Terrain: Are there mountains, rivers, swamps or open fields? (What resources are needed for the market environment?)
• Threats: Are there other treasure hunters? (How will we stay ahead of the competition?)

Like the treasure map journey analogy, strategic finance teams have the same types of considerations when planning for their organizations. The traditional approach of focusing on accounts and cost centers results in being underprepared for the journey ahead, and high performing teams know they need to consider additional variables that impact decision-making. In this context, access to, and utilizing, a broad set of data from financial and other systems is critical for building plans which prepare an organization for the journey through the business environment.

Leveraging multiple categories has been difficult

If you’ve gone through the process of pulling financial data from accounting or other source systems, then you know the dataset needs to include accounting segments, or other categories, for it to be useful for analysis and your audience. While exporting this type of data can be a cumbersome and error prone process, additional obstacles arise once you start to manipulate and structure the output into a format that can be used to create polished reports, useful forecasts or ad hoc analysis.

First generation planning solutions have attempted to make the process of extraction, transformation, management and manipulation of these datasets easier, but their aging architecture and complex administrative UIs created the need for specialized expertise, which added unforeseen costs like lagging system performance, maintenance and needing consultants to make functional changes to the model.

FP&A leaders are looking to modern financial planning & analysis software to give them the agility they need.

Multiple Dimensions in Stratify

To address these challenges, we are excited to announce additional accounting segments and planning categories in Stratify. We refer to these additional segments or categories as Dimensions, and they allow for multi-layered insight into your financial data as well as adding increased detail when creating drivers, building your financial plans and testing various scenarios.

Examples of Dimensions (Planning Categories or Accounting Segments)

In Stratify, customers have the ability to plan by any Dimension they define. A typical list of these categories might look something like this:

• Entity for consolidated financial statements
• Accounts for FP&A reporting and metrics
• Departments for budgets and managing operational costs
• Vendors for managing spend
• Locations for profit and loss by office or region
• Customers for sales planning and growth analysis
• Products for demand planning and performance analysis

By analyzing and forecasting across multiple dimensions like accounts, departments, vendors and locations, our customers gain a richer understanding of their performance. This creates a more adaptable financial plan, allowing businesses to proactively respond to ever-changing market conditions.

Example: Planning by location

Let’s dig into an example where utilizing Locations for reporting and planning allows for a more nuanced understanding of business performance. For certain types of organizations building a financial plan with a location-based focus is crucial for success because factors like commercial rent, labor costs, and even customer spending habits can vary greatly depending on the city or region.

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Adjusting for these local variables optimizes pricing strategy, anticipates fluctuations in demand and creates a more realistic plan. This also allows for informed forecasting of things like staffing, inventory, and marketing efforts, with the aim of maximizing margins and profitability.

Dimensions + business logic

Planning using Dimensions is valuable, but what sets Stratify apart is how they work with our delivered business logic. Users can immediately create forecast drivers using a point and click approach. There is no need to modify any underlying scripts, aggregations or formulas, as is common in first generation planning solutions and often requires special expertise. 

• ‍Delivered Business Logic: Users can create forecast drivers across dimensions like Accounts, Departments, Vendors and Locations (or others as needed) where a period range, a per unit rate and unit type (like headcount for a specific Department) and periodic increases or decreases can be configured without the need to create a formula and will automatically update as refreshed data is imported.
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• Calculation Confidence: Using dimensions in Stratify to create multi-layered drivers is easy, and because your data and driver logic is housed in Stratify you can trust it is accurate and easily accessible for reporting purposes or scenario comparisons.

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Get started with Dimensions in Stratify

Dimensions can be enabled in any Stratify environment, and current customers who want to deploy new dimensions from their source data systems (for example, planning to utilize additional accounting segments in your ERP) will be happy to know our Customer Success team is available to activate them today.

Stratify is the top F&PA software choice for midmarket FP&A teams. Reach out for a consultative demo with an FP&A expert today.

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43% of FP&A leaders say that they could definitely improve business performance if they had time for high-value actions like business partnership. 

New data from 150+ FP&A leaders in the U.S. confirms that having more time for business partnership would free them to do things like: 

• Give more/improved analysis to stakeholders (56%)
• Improve forecast and plan accuracy + frequency (52% & 55%, respectively)
• Make more concrete recommendations on accelerating growth or improving profitability (50%)

Finance business partnership is a valuable FP&A activity. It’s the process where FP&A becomes the heart of the business, optimizing financial outcomes for the business by helping to optimize operational performance in coordination between all departments.

Plan and forecast accuracy and deeper analysis are the keys that stakeholders need for informed decision-making and those are areas where your FP&A team can shine. 

“Acting as a finance business partner, you can join together the data that is typically siloed within different systems, analyze it, and offer strategic advice that will grow the business effectively.” Brian Camposano, CEO Stratify

Why don't FP&A leaders have time for business partnership? 

The survey revealed 4 main blockers: 

1. Lack of skill needed to facilitate business partnering 

2. Lack of speed

• Inefficient manual processes 
• Inability to build scenarios quickly 

3. Lack of real-time data 

• No access to real-time operational + financial data, metrics, or KPIs

4. Collaboration challenges

• No simple way to solicit and coordinate plans 
• Lack of finance involvement in operations
• Lack of stakeholder engagement or timely input

These blockers are common struggles for finance teams. A common thread emerges from the data: skills + technology need improvement.

FP&A leaders often downplay their unique strengths and insights, but with attention and practice, they can grow in confidence to approach and engage with stakeholders. 

And modern FP&A software can solve the speed, real-time data access, and collaborative budgeting challenges that are a top concern for finance teams. (96% of survey respondents said that inadequate tools and technology limit or probably limit their team's ability to drive positive business outcomes!)

‍“If our business partners see us as a strategic advisor, we can ensure that: growth is sustainable, risks are taken smartly, and the right trade-offs between sales and profit are made.” Christian Wattig, FP&A Expert

Join the strategic conversation around finance business partnership

Dig into further results from the State of Business Partnership survey.

Experts Christian Wattig and Brian Camposano are hosting a FREE webinar on June 13, 2024 (9a PDT | 12p EDT) to dive into the data and share ways to address the top blockers with best practices and technology. 

What we'll cover:

✔  Insights from 150+ FP&A leaders - Discover the common blockers and success factors. See how you compare.

✔  How to leverage finance skills to level up and be an effective business partner.

✔  How to use new technology to reclaim time and collaborate with stakeholders.

✔  Take action. Get your questions answered by our experts in live Q&A.

Register Now!

Once accounting closes the books, a race begins to deliver reports and analysis to your stakeholders. But if your FP&A team spends 70% of their time on tedious data transformation, management and manually creating reports, there’s no way you can win. 

Strategic opportunities or decisions around risk mitigation are coming on a daily basis. But if you can’t deliver essential FP&A reports with added data-driven analysis while they’re still relevant for decision-making and taking action, it’s impossible to stay competitive.

FP&A needs practical solutions for this constant struggle. Modern FP&A tools deliver tangible ROI and solve these reporting problems with automated data transformation, preset publishing and distribution features, and powerful collaboration functionality. All of these can dramatically speed up your monthly reporting process – so you can focus on the analysis and business partnering you were hired for AND actually want to do! 

Why You Need Faster FP&A Reporting

Automation is a top priority for FP&A leaders in general, but in the area of financial reporting, implementing it really shines and drives measurable efficiencies and results.

Why do finance teams need faster ways to produce reports? 

New insights from the forthcoming State of Business Partnership 2024 survey give a strong indication: 

• 45% of FP&A leaders say that it takes them 6+ days to produce reports once their books close. 
• 95% of those surveyed say that inadequate FP&A tools and technology are definitely or probably holding them back. 

FP&A reporting is more than a ‘must-do’ part of the job. Once you’ve dialed in the accuracy, frequency, and professionalism your reports will reliably: 

• Translate financial data into meaningful and useful information for non-finance executives. 
• Reveal trends and insights on business performance.
• Inform and encourage stakeholders to be accountable for their performance against agreed upon and approved budgets and targets.
• Represent the FP&A team’s brand throughout the organization in a polished and professional way.

You need real solutions to improve your process, so you can deliver reports before the data goes stale or the window of opportunity closes. 

Four Strategic Solutions to Automate Your Financial Reporting and Analysis

Modern FP&A software is a game-changer for financial planning and analysis teams to address reporting challenges in four key ways:‍

1. Master Data Integration 

Challenge:

‍Hunting through spreadsheets for errors. Copying over data. Manual reconciliation. Formatting errors. Aligning master data across various source systems and addressing inconsistencies. They’re all the stuff of nightmares for financial analysts. And all of them dramatically slow down the FP&A reporting process. This delay means that stakeholders don’t receive their BvA reports or other essential reports with enough time to react and adjust their spending. 
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‍“FP&A teams need consistent and accurate master data so they can report and analyze budget vs actuals to answer the essential FP&A questions: What happened? How does that compare to what we planned?”

Nate Skelton, VP of Product, Stratify ‍

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‍Solution:
‍Modern FP&A tools can improve data integration and master data management by seamlessly connecting key sources of business data, including ERP, HRIS, and CRM. Your team won’t need to second guess whether they have the latest actuals from Sales or HR. Plus, if your FP&A tool has effective master data management protocols, data imports won’t ‘break’ your master data model and cause unnecessary manual work to find and fix the errors. The time saved helps your team generate reports and dig into analysis to support stakeholders. 

‍Explore more benefits of master data management in Stratify. 

2. Workforce Reconciliation

Challenge:

‍Headcount reconciliation is a foundational piece of FP&A reporting (and a huge chunk of operating expenses). Accurate headcount reports keep different departments in sync and informed of whether they’re ahead or behind on the hiring plan – and any implications. 

But 65% of FP&A teams are still doing it manually! Manual headcount reconciliation is incredibly time-consuming, made more difficult by disconnected HRIS and finance data. 

‍Solution:

‍Workforce planning software for finance integrates HRIS data and compares it to the business workforce plan in real-time. Analysts can complete reconciliation in a simple workflow, comparing actuals vs. planned positions within minutes. The time saved is better spent on analysis and business partnership – discussing the implications of headcount performance indicators or turnover and recommending the best course of action to save money and be fully staffed for strategic initiatives or fast-moving opportunities. Accurate headcount reports are the basis of effective collaboration between strategic finance, HR, and all other business units.

3. Automating FP&A Reports 

Challenge:

‍Report formatting can be an endless task – one that won’t pay off if business partners don’t use or understand the reports! It easily eats up your valuable time, but it doesn’t need to. FP&A software automations have changed the reporting game. 

‍Solution:

‍FP&A tools like Stratify simplify report formats and ensure that the reports you generate contain the latest data (thanks to the smooth integrations). These standardizations (like automated P&L, balance sheets, and cash flow statements which can be quickly filtered across accounting segments or planning categories) will speed up your reporting cycle and shave weeks or days off of your current process.

4. Customized Stakeholder Reporting 

Challenge:

‍After basic formatting, you still need to customize your reports according to what each business unit or business partner has requested or needs to know. This final hurdle to delivering financial reporting is sometimes the final straw for finance teams – meaning stakeholders don’t get the most useful or valuable reports that would drive strategic decisions. 

‍Solution: ‍

Financial reporting software has made it much simpler to create charts and other custom visualizations that bring your financial data to life and put it into context. Additionally, a tool like Stratify allows for different reporting hierarchies and tailored versions. Then each business unit can make sense of their report, and FP&A can use it as a launching pad for productive discussion and strategic planning. When these reports are accessed within the secure Stratify platform, stakeholders and FP&A team members can assign each other tasks, ask questions, and clarify in real time.

FP&A Reporting Needs an Overhaul 

To stay competitive, your FP&A team must deliver timely, data-driven reports and analysis to stakeholders. Financial reporting tools offer automated data transformation, preset publishing and distribution features, and powerful collaboration functionality, significantly improving the monthly reporting process. If you’re concerned that your analysts spend too much time on reports with too little impact, it’s time for a change. 

Start delivering reports in time to impact decisions! 
Learn more about FP&A reporting in Stratify. 

An email notification flashes across the top of your screen.

“Hey, Head of Finance. Can you provide a few scenarios comparing outcomes if we trim sales and marketing spend to hit EBITDA targets for the quarter? We also may consider freezing hiring for a few months based on recent economic uncertainty and need to understand how that might impact revenue for the remainder of the year. By the way, this is for a presentation at the end of next week.”  

For 26% of FP&A teams, that triggers a prolonged struggle to produce the scenarios. Another 20% will have to say, “Sorry, that’s not possible.” 

Scenario planning is one of the key ways FP&A can support the CEO and leadership team. Finance-driven business partnership is in high demand. Strategic decisions require quick, collaborative, accurate scenario planning and analysis.

What is scenario planning in FP&A? 

Scenario planning is a process that businesses use to predict and analyze the effects of economic changes, disruptions, expansions, or any of the other ‘what ifs’ that influence decision-making. This allows a company to see how resilient its strategic plans are under different circumstances, promoting agility and confidence.

‘The three cases’ 

Finance pros are familiar with the base case, best case, and worst case. You begin with the status quo and predict outcomes based on things going better (or worse) than planned. But working overtime to produce these scenarios can be more trouble than it’s worth. This approach isn’t agile or collaborative enough to predict and advise on the wide range of possibilities each organization is facing. On-demand scenarios informed by real-time data and stakeholder collaboration are the new gold standard.

Scenario vs. forecast

A forecast typically represents a single outcome based on current trends and historical data, like predicting next month's sales based on current trends. Scenario planning involves adjustments to multiple assumptions in your plan to analyze and compare multiple, diverse outcomes. Scenarios are designed to explore a wider range of possible futures for your business than a forecast. 

Scenario vs. sensitivity analysis

The two are often confused, but there’s an important difference. Sensitivity analysis uses minor adjustments – tweaking one variable at a time (like changing the cost of goods sold) – to see how it affects the outcome (like net profit). Scenario planning, on the other hand, changes multiple variables simultaneously to see a range of outcomes, providing a more holistic view of potential risks and opportunities.

Why is scenario planning important for FP&A? 

Strategic finance teams use scenario planning for these top reasons:

• Make informed decisions – Uncertain and volatile conditions shouldn’t force you into blind decisions. Scenario planning gives you a glimpse into possible outcomes to boost executive and investor confidence. 
• Do your due diligence - Anticipate the benefits or risks or different decisions, and examine an opportunity from every angle.
• Enable cross-functional decisions – Effective scenario planning requires integrated data from multiple business systems, and inputs from multiple departmental or operational stakeholders. Collaboration vastly improves the usefulness and credibility of the versions. 
• Reach strategic goals faster – Opportunities for growth come and go in an instant. Don’t be left behind because stakeholders are holding out for evidence. 
• Achieve FP&A business partnership – Go beyond basic planning and reporting to engage stakeholders to provide input and manage assumptions thereby increasing the accuracy and strategic value of your scenarios.

Learn More: FAQs on the FP&A Process

Why do FP&A teams struggle with scenario planning? 

If finance leaders know the importance of scenario planning, why is it such a challenge?

1. It’s one step too many

Scenario planning happens after the required monthly work of reporting and forecasting is complete. If those things take too long, scenario creation and analysis will always get skipped. 

2. It’s clunky, even with most FP&A tools

It’s difficult to duplicate and modify spreadsheet-based financial models and prevent errors from cascading down into your model. It may be possible to run a scenario with low disruption to the model, but anything requiring structural changes (and most scenarios worth the effort do!) will be a struggle. And many FP&A tools don’t make it easier, forcing analysts to rely on an inefficient mix of manual import workarounds or offline communications where inputs are lost. 

3. You don’t have the data you need 

Poorly integrated data can prevent you from modeling out scenarios like headcount changes, which require real-time HRIS data integration with an FP&A tool.

4. Reputational risk

Finance leaders are hesitant to commit to regular scenario planning or to deliver scenarios that haven’t been validated by other business partners. They want to move quickly and deliver scenarios, but the risk of an error (and reputational damage) outweighs any benefit. 

5. Lack of stakeholder involvement

When FP&A builds the scenarios in a silo, they’re less convincing to board members or executive leadership. You’re more likely to hear, “Who made this and how? Does “the team” know what’s being proposed here? Why should we act on it?”

How can FP&A do scenario planning better? 

How can finance become the trusted driver of business strategy and deliver scenarios that support business growth? 

Prioritize these capabilities as you improve your scenario planning process. 

1. Speed 

Choose an FP&A tool with automations to speed up your reporting and forecasting process. This will provide ample time to build and analyze scenarios before sharing with management.

2. Version management controls 

In effective scenario planning, every change you make needs to translate down through the model consistently. There are hundreds, if not thousands, of dependencies for a single assumption. Prioritize version management features that protect your master data hierarchy while still providing flexibility to propose alternate structures and plan while allowing simple and consistent adjustments across duplicated versions.

3. Stakeholder collaboration

You need their input and buy-in, whether to validate data and assumptions, or input directly into the scenarios in a connected process. Powerful collaboration management features also promote accountability and provide an understandable audit trail.

4. Integrated business logic 

Driver-based modeling and planning in the language of business make collaborative scenario planning infinitely easier. Changes to the model don’t require specialist support or complicated formulas. 

5. A team with the right mindset 

Are your financial analysts ready to dive into more strategic work? You need a team who knows their job is more than publishing reports and punching out a budget on demand. They have a responsibility, and the unique perspective, to contribute valuable work that improves business performance.

Confident and informed scenario planning

Imagine receiving that same email from before – requesting a scenario on relatively short notice for a big decision. Now imagine reporting back only a few business days later and being able to say: 

“Here are two scenarios we created last week and recommend sharing with the executive team to facilitate decision-making. We worked through three rounds with each business unit leader, reviewing and adjusting their inputs across several areas of the operating plan. We’re confident that operational leadership is familiar with these proposals and understands the actions they’d need to take depending on the decision. Each of these scenarios is consistent with historical performance and existing business unit capacities.” 

We all know the future is still uncertain. But this approach to scenario planning breeds so much more confidence than saying, “FP&A produced this solo, using whatever data was available.” 

There are big roadblocks to scenario planning, but it’s not an impossible challenge! The right mindset and supportive tool can help you move from sharing occasional, timid scenarios to reliable and informative glimpses into the future that drive confident decision-making and business success.

Investment in modern technology across an organization can yield efficiency and even competitive advantage in the marketplace. So why does FP&A consistently get passed over in decisions to upgrade a software platform or system?

2023 research from FP&A Trends uncovered that:

“24% of finance leaders report that FP&A is not considered a strategic investment area within their company.”

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One reason rises to the top: 30% of the FP&A practitioners said it was difficult to justify the ROI on FP&A technology against investment in shorter-term sales and marketing activities.

But the evidence is mounting that those short-term investments can’t match the long-term ROI of an FP&A team equipped with modern budgeting and forecasting software.

Don’t delay this investment for another year until you’ve considered these factors.

Why are other investments winning over FP&A software?

You’re a finance leader: you care about the bottom line and want your software spending to have a definitive path to ROI.

• The potential ROI of sales & marketing software can be easier to calculate than FP&A software. It’s hard to argue when Sales requests investment for Gong when they can draw a direct link between software investment and closing 20% more deals!
• Sales and marketing software vendors have invested heavily in easy onboarding with low or no implementation costs. In contrast, legacy FP&A software often requires intensive IT support, time, and training to learn. Even though third-gen FP&A platforms now offer much faster implementation and ease of use, the stereotype persists and is hard to shake.
• It’s a classic case of “the cobbler’s children have no shoes.” Finance wields a lot of influence when other departments pitch a new investment in software, yet your own team is fighting the daily battles against inefficient budgeting processes and disconnected operational and financial data. You’re secretly drowning in manual work, but no one else in the business will notice what is holding you back (let alone champion the tools you need to drive business performance!)

In light of these challenges, it makes sense why FP&A software investments get delayed year after year. But they shouldn’t – here’s why.

Why FP&A software is a good investment

FP&A has a superpower: combining operational + financial insights to collaborate across business units as strategic finance business partners. With a bird’s eye view of trends across the business, you can advise the leadership team and business partners with real-time data and insights to make wise decisions in uncertain times.

That’s why FP&A software investment is more than just software investment. It doesn’t just benefit your analysts (who will undoubtedly save time and sanity). It gets you beyond manual tasks so you can identify ways to save or generate revenue to drive business performance.  

FP&A generates revenue in direct and indirect ways, and both rely on modern technology. (thanks to Mohamed ElRouby, CFO MEA at Pharmanovia for this approach). When you build your business case to purchase FP&A software, remember these two angles.

Direct ROI

FP&A drives direct value when the team looks at the hard numbers of projected and actual expenses and hard data and finds immediate ways to save, like improving cash flow, collection, or cost savings. Analysis is FP&A 101, but it’s impossible to do it well without accurate, accessible, synchronized data to work with!

How FP&A software drives direct ROI

• Spot anomalies and opportunities to save money – Real-time data access eliminates the delay of gathering data from disconnected business systems
• Avoid costly mistakes - Data accuracy is key. Stale, disorganized, or incorrect data can cost you thousands in errors!
• Improved business performance - With the ability to compare scenarios in a fraction of the time, you can support your C-suite to navigate through uncertain economic conditions – or even develop a game-changing idea.

Did you know that Amazon Prime was the brainchild of a strategic FP&A team? Jason Child’s FP&A team at Amazon analyzed the performance of offering free shipping vs a 10% discount and realized that free shipping was the more profitable option. Now, there are 230+ million paying Amazon Prime members. Now that’s the power of an FP&A team applying their unique insights to do more than simply cut costs.

Indirect ROI

FP&A produces value indirectly through business partnership. When analysts have the bandwidth to collaborate with stakeholders they can help them do their jobs better. And, when finance gives budget owners direct access to their financial data and insights, a ripple effect of more responsible spending will spread across the business.

How FP&A software drives indirect ROI

• Savings through more responsible spending – Automated financial reporting and self-service access to data help stakeholders take ownership of their budgets, which translates to more responsible spending.
• Increased capacity for finance business partnership – Automation reduces your manual workload so you finally have the time to understand and collaborate with budget owners. You’ll find ways to save or increase efficiency as you get to know their business unit and challenges.  
• Increased revenue through more accurate plans –The best plans are informed by stakeholders themselves. Engage them with less friction in a collaborative planning process that yields more accurate plans and real fiscal results.

One VP of Engineering found immediate ways to trim his budget after meeting with his finance business partner to review his workforce and expense plans.

“Suddenly I was recommending a cut to my own spending. Let me tell you, that was a first.”‍

Read his journey from a ‘credit card mentality’ to budget accountability.

IT Resources are no longer a roadblock

Hopefully, your brain is humming with different ways an FP&A tool could prove its ROI over time. However, not all modern FP&A software is created equally.

Lack of IT resources remains a top objection to FP&A software investment (21% of respondents in the FP&A Trends survey). Legacy FP&A systems (including on-premise installations) are expensive to configure and maintain – but they’re no longer your only option.

Some 3rd gen FP&A platforms, like Stratify, enable you to get up and running fast because we have intentionally focused on faster deployment time, data integration capabilities, simplicity in forecasting and budgeting, user-friendliness, and stakeholder collaboration. The platform doesn’t require extensive IT resources to implement and maintain. FP&A finally has powerful and viable alternatives with fast time to value – just like those sleek sales and marketing platforms that are so easy to pitch.

Compare Your Options: Top FP&A Software Solutions

Make this the year you finally lock in FP&A software investment

“Companies with modern finance functions can make better decisions on mergers and acquisitions, negotiate better prices from vendors and identify new markets that will be completely invisible to companies that don’t modernize their finance functions.”

Ben Chacko, Grant Thornton Senior Manager, CFO Advisory

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Uncertain economic times demand that FP&A be a proactive driver of business strategy. Investment in the right tools and software can’t be an afterthought. Your counterparts in the organization have modernized, and you can’t delay another year. Without the right tools, you can’t deliver the strategic financial planning the business needs.

When you make your case for an upgrade or overhaul, include both the direct and indirect ways you can drive revenue and help the business thrive for years to come.

In my years as a financial analyst, I spent a crazy amount of time battling one surprising source of frustration: master data. Yet, I’ve noticed that master data management often gets overlooked by FP&A tools and planning platforms as though it isn’t a critical part of the job. 

But strategic financial planning requires clean master data. Without a strategy for master data (and the right FP&A tool to help), you’re stuck with extra days of manual, frustrating work tacked onto basic tasks like month-end close and BvA reporting. 

Let’s break down this important, but ignored, aspect of the FP&A workflow. Plus, I’ll share four ways your FP&A platform should help you do MDM better. 

What is master data?

Master data refers to the foundational categories of data that are essential for the operations of an organization. Master data records and categorizes the key entities and attributes that define the business, like products, customers, and suppliers. 

Master data is typically static or slow-changing, compared to transactional data, which records day-to-day operations. That’s because master data represents the accurate, ‘gold standard’ of how your business will refer to certain customers, departments, or products across various IT systems that different departments are using (for example, CRM for the sales department and GL for accounting).

What is master data management, and why is it important?

Businesses operate with so many different systems generating mountains of data. For those systems to integrate and communicate coherently, you need to merge that data intelligently and stay organized. That’s the process of master data management: creating, maintaining, and standardizing a single source of truth to reduce confusion and ensure accuracy. 

Messy master data creates chaos. I’ve seen it happen many times. Unfortunately, financial analysts are often stuck fixing these inconsistencies – because the resulting errors are costly!

For example, if different entries in the GL call the same vendor “Amazon Web Services” and “AWS”, analysts need to find and clean up every instance of that confusion to do their reporting and planning. Then they must remember to streamline different entries for AWS every time, plus stay alert for similar issues. 

What does master data management mean in finance?

CIOs or data analysts may share responsibility for master data, but financial analysts can’t avoid MDM completely. FP&A needs accurate master data to: 

• Create, track, and manage the financial plan.
• Report and analyze budget vs actuals to answer the essential FP&A questions: What happened? How does that compare to what we planned? 
• Produce accurate and standardized reports for budgeting and forecasting across the entire organization, sharing with stakeholders to advise in decision-making. 
• Mitigate risk and stay legally compliant. 
• Improve collaboration and communication between different business units, no matter what systems they work in. 

Effective financial planning and analysis requires good master data management. But, FP&A Trends recently shared that 33% of FP&A professionals struggle with data that has multiple definitions and is difficult to consolidate. I’ve seen this frustration play out in a few specific ways. 

How are FP&A teams doing master data management today? Why is it so frustrating?

Labor Intensive 

In my experience, managing and cleaning up master data is a laborious process of sifting through various spreadsheets, and hunting for inconsistencies with pivot tables and vlookups.

MDM added a lot of extra time to my monthly close and BvA report process. I had to find and fix all the master data errors before I could get to the important part of identifying which deltas were noteworthy. For example, a variance on cloud computing spend meant using valuable time extracting transactions from one system and comparing them to planned expenses – only to discover that it was all down to mismatched vendor names.

Managers weren’t getting their BvA until week 3 of the following month, so they had no chance to react to our findings and course correct their spending or plans. It was a vicious cycle and I couldn’t do the valuable work that I wanted to do! 

Restrictive hierarchy structure

FP&A tools haven’t laid a great foundation for master data. Once data is clean and consistent, analysts often need to re-arrange expense and workforce data into a hierarchy that makes sense for reporting and planning. Data imports from other systems like GL are usually in a different hierarchy. But in many popular FP&A tools, you only get one master data hierarchy. If you integrate new data automatically from other systems, your planning hierarchy will get overwritten!  

Analysts really need the ability to create multiple hierarchies (like one that matches the GL, one for reporting, and one for a reorg scenario) without overwriting master data. 

Solving these problems would significantly improve FP&A efficiency, speed, accuracy, and job satisfaction. 

How to streamline master data management in FP&A

You might assume that any FP&A software would make MDM easy, since it is such a big source of frustration and busy work. Unfortunately, in my experience, that’s not the case. 

Be sure your vendor has these 4 capabilities to handle master data: 

1. Seamless integrations 

Master data integration is a big source of errors. Look for an FP&A tool that ensures flexible and automatic data integrations from your ERP, CRM, HRIS, and more. You need your workforce and expense plans to be completely in sync with your systems of record (SOR) – no hiccups.  

2. Allows multiple data hierarchies

Choose a tool that allows you to reorganize accounts or departments in a different hierarchy than your SOR. For example, analysts using Stratify can move, regroup, and create additional rollups without that data being pushed back into the SOR and compromising their master data. 

3. Data import mapping 

In many popular FP&A platforms, you would have to switch off your master data integration before importing new data. Otherwise, errors would flood in, creating more work. Look for an FP&A tool that can flag the names of new or different master data categories within a new dataset (like a differently spelled vendor or customer name), and allow you to review and approve for accuracy. Stratify will flag those differences rather than blindly creating a new data entry, and remember your master data preferences moving forward. 

4. Tombstoning 

Find an FP&A tool that securely saves a record of your master data version history. Let’s say someone at your organization preemptively deleted a vendor, expecting to switch – but that never panned out. ‘Tombstoning’ prevents that chaos! Your FP&A platform should be able to turn back time and help you restore your master data before that change. You can go back and see the record of changes to pinpoint and prevent errors, so your master data stays ‘clean’ and workable.

Stratify has solved the MDM dilemma 

At Stratify, we’ve invested heavily in master data management to solve this persistent problem. We’ve been obsessive about simplifying MDM, leading the way with innovative features like data import mapping and tombstoning.  

Your business needs a unified and definitive source of truth, and FP&A needs to be freed from the burden of master data management to focus on strategic finance business partnership. With Stratify, those two things are finally possible.

Throughout most of my career, I saw my engineering budget allocation like a magic credit card that either worked – or didn’t. Going through a collaborative budgeting process using the Stratify platform changed that. I now have a more strategic lens when it comes to spending (and Finance is pretty stoked about that!)

Here’s what’s changed for me and why.

Finance’s plan, finance’s problem

Twenty years ago I was a new cost center owner with responsibility for an R&D team, walking into a budget meeting. My CFO and COO were hunched over a desktop looking at mysterious spreadsheets. I pitched the business case for my engineering plans that year, trying to tailor my budget requests to get approved, with my fingers crossed. Ultimately, I had no insight into the wider strategic plans they were working toward – or how my department fit into the big picture.

In another early job, my finance business partner would come to me at annual planning time with suggestions and requests. He’d say, “T&E from last year was this much. This year it should be about 30% more.” Looking back, I didn’t fully understand the context of those requests. The end result felt like I was given a set amount of money as discretionary spending for my department.

Plus, a lot of communication was indirect, over email. I would receive my cost center spreadsheet from finance. I’d have to update my travel spend, make adjustments, and then send it back. Our communication was more about deadlines, and less about strategic questions or collaborating to find areas to save. I assumed my finance business partner would take the spreadsheet and do magic behind the scenes, pulling from one area or another across the whole business budget to make it all add up.

I think this mindset is common for budget owners in organizations with a top-down budgeting approach. My finance business partners were always helpful, but when they shared my budget it felt more like finance’s plan & problem to solve than mine.

Those initial experiences with budgeting formed my approach. I was purely focused on my projects, my people, and what engineering needed to do. I would aim to spend the budget I was given at the start of the process. I wasn’t thinking about how each smaller line item fit into the bigger picture, or the details behind each number.

Budget owner mindset

Now at Stratify, I’m in the unique position of being the Head of Engineering tasked with developing an FP&A software tool that engages non-finance users in budgeting and planning. We run Stratify on Stratify, so I’m now a user of the software my team has built.

When we started our annual planning process in Stratify I didn’t anticipate that it would really impact me. To my surprise, my mindset toward my department spending has completely changed. Here’s what happened.

See the workflow that my finance business partner and I used to collaborate on my budget in Stratify.

Collaborative budgeting

What was different? My finance counterpart invited me into his planning environment in Stratify. He’d assigned me a task to review my expense and workforce plans: Did what he had prepared align with my objectives and goals for the department?  No one had ever asked me to look at a budget through that lens. That level of genuine collaboration was a first for me – and it got me thinking strategically.

Transparency

The level of transparency in the platform made it possible for me to evaluate the plan he proposed. The planning environment in Stratify shows the assumptions behind budget line items in plain English. No complex formulas to decipher.

For example, it was easy to see the number of seats that was driving my total spending on Atlassian software. Because of that, I could quickly see that I was paying for more licenses than we needed. What a waste! Whoa – suddenly I was recommending a cut to my own spending. Let me tell you, that was a first.

Easy to propose changes to plan

I made various changes to the proposed plan. With a few clicks, I found a way to fund training for my team without increasing the overall budget. I added notes on various lines to give my finance business partner context for other changes I wanted to make. No emailing spreadsheets – it was all right there for both of us to see and discuss. Aligned, approved, done.

Self-service access to data

Now I get a BvA report each month that prompts me to jump into Stratify and check on my spending. One click and I can see my progress against my plan.

That’s not something that would have crossed my mind in previous roles because it wasn’t simple to find that information. I suppose I could have asked my finance business partner for support, but that friction held me back. There is something about being able to get at it myself that makes it feel like “my budget.”

Now I can course-correct. For example, we overspent on travel last month – my bad.  I adjusted my plan to balance it out this month.

Ultimately, that ready access to data helps me make more informed decisions about my project timelines and hiring plans. I’m not waiting for someone else to balance things for me; I’m looking to manage it on my own.

Data-driven decision making

The collaborative budgeting process in Stratify showed me that Finance is actually counting on me for insights on the bet way to deploy spending. Without my input, they can’t accurately project the future for our CEO and Board.

Engineering happens to be a pretty expensive cost center, so my stewardship of spending makes a difference to the bottom line. Every dollar adds up, so I want to be spending on areas that count, because delivering our business plan is going to benefit my employees and their well-being.

Now I understand how I can better align the engineering budget to meet goals. I’m making what I feel are strategic, reasonable budget requests to support my department and help the whole business run more smoothly.

And the credit card mentality? It disappeared. I’m a better executive because of that.

This 3-part article explores frequently asked questions around FP&A, exploring the financial processes, people, and systems that maximize a business's financial and operational performance.

What is FP&A?

Financial planning and analysis (FP&A) is a strategic finance function in an organization. It combines financial planning, budgeting, forecasting, and analysis to help guide executives to make the right decisions for the business. An effective FP&A team positively impacts the company’s current health and future growth. FP&A plays a pivotal role in setting financial targets, monitoring performance, and identifying ways that a company can grow and create efficiencies in its operations.

Strategic finance vs FP&A: what's the difference?

Is FP&A accounting or finance?

Typically both FP&A and accounting fall under the umbrella of finance, but FP&A is distinct from accounting - mainly in its focus. Accounting focuses on recording and reporting historical financial transactions, and maintaining a viable cost structure. FP&A is forward-looking. While it still uses historical data, it does so to forecast future financial outcomes and inform strategic decisions.

Part I: FP&A Process

What is the typical FP&A process cycle?

The FP&A process cycle typically consists of:

• Budgeting: Setting financial targets and allocating resources for the upcoming period. This part of the process involves collaborative financial planning with various departments to establish a comprehensive budget that aligns with the strategic business goals.
• Forecasting: Frequently updating financial projections based on current trends and market conditions. As business is constantly changing, this part of the process allows for adjustments, so that financial forecasts remain relevant and accurate to the business.
• Reporting: Analyzing actual financial results compared to budgets and forecasts. This step involves generating detailed reports that highlight variances and key performance indicators, providing a clear picture of the organization's financial health.
• Analysis: Providing strategic insights and recommendations to improve financial performance.  This involves delving deeper into the data to identify underlying trends, opportunities, and risks, and offering actionable advice to guide future strategic decisions.
• Collaboration: Engaging with stakeholders across the organization to gather input, share findings, and align financial planning with overall business objectives. Effective communication and collaboration are crucial for ensuring that the FP&A process supports strategic decision-making and drives organizational success.

Let’s look at each of these steps in the process in a little more detail and answer some top questions for each.

Budgeting

What is the purpose of budgeting in the FP&A process?

Budgeting sets financial targets and allocates resources for the upcoming period. It establishes a financial framework for the organization's strategic goals, ensuring that resources are allocated efficiently and effectively to support business objectives.

How is the budgeting process typically conducted?

The budgeting process involves collaboration between the FP&A team and various departments to estimate revenues, expenses, and capital expenditures. It often includes reviewing historical data, analyzing market trends, and incorporating strategic initiatives to create a comprehensive budget. An FP&A planning tool increases efficiency in this process, ensuring that all critical business data is synchronized and accurate as it’s being used to budget.

Forecasting

Why is continuous forecasting popular?

Continuous forecasting is popular because regular updates based on real-time data ensure that financial projections remain relevant and provide accurate guidance for decision-makers. Many FP&A teams are shifting to continuous forecasting to adapt to changes in their business environment, market conditions, and organizational strategies.

What techniques are used in financial forecasting?

Financial forecasting can employ various techniques, including trend analysis, regression analysis, and scenario planning. The choice of technique depends on the complexity of the business, the availability of data, and the specific goals of the forecast.

Reporting

What is the importance of reporting in the FP&A process?

Reporting provides a detailed analysis of actual financial results compared to budgets and forecasts. It helps identify variances, track performance, and assess the financial health of the organization, enabling informed decision-making.

What types of reports are commonly used in FP&A?

Common FP&A reports include income statements, balance sheets, cash flow statements, variance analysis reports, and key performance indicator (KPI) dashboards.

Analysis

How does analysis contribute to the FP&A process?

Analysis offers strategic insights and recommendations to improve financial performance. It involves examining data to identify trends, opportunities, and risks, and providing actionable advice to optimize financial outcomes and support strategic decisions.

What tools and techniques are used in FP&A analysis?

FP&A analysis often uses tools such as spreadsheets, financial modeling software, and business intelligence platforms. Techniques include ratio analysis, sensitivity analysis, and what-if scenarios to evaluate the potential outcomes of different business decisions.

Collaboration

Why is collaboration essential in the FP&A process?

Collaboration ensures that the FP&A process is aligned with the overall business objectives and that financial planning incorporates input from various stakeholders. It fosters a shared understanding of financial goals and enhances the quality of decision-making.

How can organizations facilitate effective collaboration in the FP&A process?

Effective collaboration can be facilitated through regular cross-functional meetings, clear communication channels, and integrated planning tools that allow for real-time data sharing and analysis.

More on this topic: 5 Ways to Finally Achieve a Collaborative Budgeting Process

Part II: People in FP&A

It's all about business partnership and collaboration in strategic finance.

The success of the FP&A leaders is not solely dependent on the financial data and tools, but also on the people involved in the process. Collaboration and business partnership with key stakeholders is important to ensure that the FP&A function effectively supports the rest of the organization.

What is the role of business partnership in FP&A?

Business partnership in FP&A refers to the collaboration between the FP&A team and other business units or departments. Financial analysts act as a strategic partners, providing financial insights and analysis to support decision-making and drive business performance. For example, a strong business partnership can help align financial planning with business objectives, ensuring that financial resources are allocated efficiently to support strategic initiatives. This is an important factor in cross-functional and significant business activities like workforce planning, where finance, HR, and other stakeholders need to work together effectively.

50% of CFOs see C-suite collaboration and establishing finance as a business partner across the enterprise as a top priority. Business partnership is key to increasing the strategic value of the finance function. Support your finance team to implement stakeholder engagement plans to guide their communication and interactions with each business leader based on their level of investment and priorities.

Read more: Top 6 Focus Areas for Strategic FP&A Teams

How can FP&A teams foster strong business partnerships?

FP&A teams can foster strong business partnerships by actively engaging with business unit leaders, understanding their strategic departmental goals, and providing tailored financial analysis and insights to support their decision-making. FP&A teams have the opportunity to become the heart of strategic decision-making in the business through effective collaboration and coordination.

Why is collaboration essential in the FP&A process?

Collaboration is essential in the FP&A process to ensure that financial planning and analysis are integrated with the overall business strategy. It enables the sharing of insights, facilitates alignment across departments, and ensures that financial decisions are made with a comprehensive understanding of the business context. Fostering a culture of collaboration and partnership is key to maximizing the business impact of the FP&A function in 2024.

How can FP&A leaders facilitate effective collaboration?

FP&A leaders can facilitate effective collaboration by creating a culture of openness and transparency, where team members feel encouraged to share their insights and perspectives.

FP&A leaders should promote a collaborative budgeting process. Collaborative budgeting is a 'bottom-up' approach where department heads actively partner with the finance team to build a data-backed annual plan. It promotes accountability and ownership, improves accuracy, breaks down data silos, and positions FP&A as the strategic finance business partner. A collaborative budget is built with stakeholder input right into the plans, saving time for financial analysts and resulting in a more accurate, aligned, and realistic budget.

Implementing collaborative tools and platforms can also enhance communication and data sharing among stakeholders, making the FP&A process more efficient and integrated.‍

Read more on this topic: The Collaborative Budgeting Process Your Finance Team Needs.

What is a finance business partner?

A finance business partner (FBP) is typically a financial analyst that works closely with various departments to provide financial insights and support strategic decisions. They perform financial analysis, assist with budgeting and forecasting, monitor performance, and recommend improvements.

FBPs act as advisors to functional leaders and other budget owners in an organization, translating financial data into actionable insights and facilitating communication between finance and other departments. Their role integrates finance with business operations to drive better overall performance.

Part III: Systems in FP&A

What role do systems play in the FP&A process?

Systems are the technological backbone of the FP&A process, providing the tools and platforms necessary for data collection, analysis, and reporting. They enable automation of repetitive tasks, integration of data from various sources, and generation of real-time insights for informed decision-making.

What are some key features of modern FP&A systems?

• Data Integration: Ability to connect with various data sources, such as ERP, CRM, and HRIS systems, to ensure data accuracy and consistency.
• Scenario Planning: Tools for creating and comparing multiple financial scenarios to assess the impact of different assumptions on the company's future performance.
• Dashboards and Reporting: Customizable dashboards and reporting capabilities that provide real-time visibility into financial metrics and KPIs.
• Strategic Collaboration: Features that facilitate collaboration among finance teams and other business units, enabling a more integrated approach to financial planning.

For example, Stratify's platform is designed for collaborative stakeholder planning, offering real-time analytics of financial and operational performance through a user interface that all users can navigate easily. It also includes a "Tasks" feature, which allows finance teams to tag sales or marketing leaders, ask them questions, and direct them to input their data without exposing them to complex financial models.

Compare your options: Top FP&A Software Solutions for Your Company Size

How do FP&A systems contribute to the strategic finance function?

FP&A systems contribute to the strategic finance function by providing the necessary infrastructure for data-driven business strategy. They enable finance teams to move beyond manual processes and spreadsheet-based models, allowing for more efficient and accurate financial planning and analysis. By leveraging modern FP&A systems, finance teams can focus on delivering strategic insights and become a business partner to key stakeholders to help drive efficient company growth.

Take the next step to improve your FP&A function

FP&A is a critical function within an organization that encompasses a wide range of activities, from budgeting and forecasting to analysis and collaboration. By understanding the FP&A process, leveraging modern systems and tools, and fostering strong business partnerships, finance teams can support strategic decision-making and drive organizational success. As the role of FP&A continues to evolve, embracing innovation and adopting best practices will be key to support the executive team and staying ahead in the dynamic world of strategic finance.

“How can I get my department leaders to be accountable for their spending and engage more with the financial data I share with them?”

It’s a daily headache for finance teams. But if your efforts are going to have any impact on the bottom line, then you need every business leader to be accountable for their budget. You’re looking for department leaders who know whether they’re over or under on budget – and why. They actively use reports and forecasts to plan ahead and inform their decisions. Ideally, they’re looking for ways to be more efficient with every dollar and understand how they fit in the big picture of business performance.

Each business partner will be at a different starting point. It might feel daunting to initiate and encourage this mindset shift, but it’s necessary and possible for FP&A to drive this change and see positive results.

The Status Quo

Generally, budget owners operate pretty myopically, thinking, “How much do I have to spend this year? How can I accomplish our department goals with that money?” They may be functionally unaware of how their spending and budget impact other departments.

Professor Richard Lambert explains it well:

“To be successful up to this point in their careers, they haven’t had to encounter finance and accounting. Now, they’re in positions where issues like budgeting, resource allocation, and performance evaluation are important.”

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‍Strategic budget planning requires a high level of collaboration and coordination, driven by FP&A. Transparency is essential; it’s not enough to prove that you spent the $2 million allocated to marketing, you need to assess how it was spent and measure ROI properly. To succeed, finance needs to help each budget owner plan to manage their spending and deploy dollars more effectively.

5 Ways to Encourage Budget Owner Accountability

1. Start at the top.

Be sure that business leadership are modeling this accountability mindset to set the expectation for all teams. This gives FP&A the support needed to dive into deeper discussions with each business unit.

Then, finance managers can implement new levels of fiscal responsibility from the bottom up and ask business partners: “given these overall strategic goals, what headcount, expenses, and systems do you need to succeed?”

2. Involve stakeholders in building their budget.

Sometimes, finance can be a bit of a black box. FP&A asks business partners for input and comes back with a budget, but doesn’t show how that input was taken into account. But if you send someone a pre-built budget, it’s really your budget, not theirs. It’s far better to co-create it within the bounds of current business goals.

Adopt a business partner approach, knowing that FP&A doesn’t exist merely to drop off arbitrary budgets, gather data, or slap someone’s wrist for overspending. As the finance leader, try to assign a dedicated analyst or team member to cover each business unit and get embedded to understand their goals as you collaborate on the budget and solve problems together.

3. Meet them where they are.

Approach stakeholders with empathy. Consider their underlying motivations for what you might consider willful ignorance or reckless spending.

• It could be their first time doing this, and they need more guidance to build and maintain a budget to achieve their business plan.
• Maybe numbers and financial data just terrify them – an executive with years of expertise and people skills can turn into a deer in headlights when presented with a spreadsheet.
• They may think that profit and loss management is less important than achieving their business plan. You can come alongside to uncover how a responsible budget supports their plan.  

Finance teams can reframe data for greater understanding. For example, savings on salaries may not be a favorable outcome if it means that sales is behind in hires. Or the opposite could be true; an opportunistic hire might be impactful to a key project. This tailored approach builds trust between stakeholders and FP&A and yields more strategic dialogue and results.

4. Provide transparency with automated financial reporting.

Accountable budget owners need frequent insight into their performance against their budget and business goals. FP&A needs to provide budget owners with access to financial data and reports on a regular cadence. Stakeholders have to know how much they are spending so they can begin to self-regulate and adjust based on outcomes and forecasts.

The finance business partner can review these reports as part of regular meetings, explaining the BvA report and the implications of either maintaining allocations or making changes to improve performance.

Modern FP&A software like Stratify gives budget owners self-service access to these numbers so they don’t need to wait for finance to provide updates. Your goal here is to remove barriers to access while providing important context for each budget owner.

5. Boost their financial literacy.

Not every business executive is automatically a savvy budget owner. Use meetings with business partners to explain key concepts and answer their questions. You could focus on areas like:

• Comparing their budget to industry averages for similar-sized businesses.
• Regularly reviewing variable expenses to find opportunities to save.
• Ranking expenses by importance and ROI potential.

Financially literate stakeholders will have a valuable skillset that’s in high demand. Plus, they’ll be more engaged in the planning process and appreciate what FP&A can offer to help solve their challenges.

Start a Powerful Chain Reaction

When FP&A helps stakeholders take ownership of their budgets, the value of financial data is elevated. They’ll derive real value from the FP&A reports that you share, and finance will have the integration and respect within the business that it needs to orchestrate strategic financial planning. Don’t shy away from this important responsibility. It’s one of the best ways to build momentum and progress faster toward the business’s short and long-term goals.

Great synergy between CEOs and finance teams is a rare but powerful combination. With experience in both roles in my career, it’s clear to me that CEOs need their finance teams to be their biggest supporter and secret weapon.

To become that dynamic and effective team the CEO needs, FP&A has to rediscover their main purpose in the business. Then they can deliver value in four important ways:

• Run a smooth & coordinated annual planning process.
• Answer ‘what if’ questions through scenario planning.
• Deliver timely, automated financial reports & forecasts.
• Meet the CEO where they are as a strategic finance business partner.

FP&A Basics: trust & innovation

Financial planning and analysis has to start with accurate data. And it should yield clear advice for CEOs on options and opportunities to act based on trends and performance.

The numbers from the finance team need to be trustworthy. Without accessible, accurate, and synchronized financial and operational data, no one will have the necessary full picture to make strategic decisions.

Typically, the CEO can’t get in the weeds with every business unit. They’re relying on accurate reports and snapshots to know how each team is doing. That’s why FP&A has to stand at the intersection of finance and operations. From that position, finance can understand the performance drivers and challenges for each business unit.

More than that, they can see the downstream requirements and implications of one department’s performance on another’s. With this insight, they can make informed and innovative recommendations to the CEO to drive operational efficiency and better business performance.

There are 4 specific ways FP&A can build trust and deliver innovation for business success:

1) Run a smooth, coordinated annual budgeting process.

CEOs really lean on FP&A during the annual budgeting process. In my experience, CEOs may request a few different versions of the budget (like an aggressive, baseline, and downside case) and it’s up to FP&A to get going to create those plans.

To do this strategic budgeting and planning well, FP&A needs historical data and analysis on business performance, plus all the data to inform plan assumptions on a go-forward basis. And they need to do that for each scenario they’ll be modeling. It takes organization and some real proactivity.

And analysts should be engaging deeply in conversations with each P&L owner to say, “Hey Head of Rev Ops, based on this aggressive scenario the CEO wants, what does your business unit need to deliver so we can achieve the outcomes here?”

Great annual plans have to be informed by stakeholders themselves. The CEO needs this collaborative budgeting process to be driven confidently by FP&A, and trust that all budget owners have contributed to make the plans accurate and stronger.

2) Answer ‘what if’ questions through scenario planning.

Leadership often requests different forecast scenarios as part of the planning process (or before a big opportunity) to assess ripple effects across the business. FP&A teams can produce those scenarios and understand and illuminate possible impacts.

Unfortunately, scenario planning takes a tremendous amount of time for most FP&A teams. This is because they usually have several disconnected models that must be updated in order to produce the new scenario, instead of an efficient scenario planning tool.  

For example, if the CEO is contemplating a 10% workforce cut and needs a new scenario, you need to adjust that in the headcount plan. Then you’ve got to go into your expense plan and make similar adjustments in the absence of an integrated model that connects these things together.

Finance teams need to be working from an integrated plan (not disconnected spreadsheets) to save valuable time and deliver insights quickly to the leadership team.

3) Deliver timely, automated financial reports & forecasts

In addition to scenario planning, FP&A teams need to quickly report on the actuals from the month, compare that to the annual plan, and forecast accordingly. These reports and forecasts inform the CEO on where the business stands so they can make better decisions.

‍Reporting and forecasting is typically a monthly task, but current FP&A systems take a gargantuan effort to produce even these basic month-end reporting packages! Legacy FP&A tools can’t support the expanded role that finance needs to play in innovation and problem-solving if they can’t speed up FP&A reporting. These reports are critical for financial transparency and investor/board relations. The CEO is counting on you to deliver them on time, interpret the results, and provide recommendations on how to act next.

4) Meet the CEO where they are as a strategic finance business partner.

Some leaders are more hands-off. They may not want to learn another tool and log directly into a dashboard to look at actuals and forecasts. But another CEO may be interested to access that data, jump in, and be more involved. Having a collaboration-first FP&A tool will make it possible to give your CEO the level of detail and access that they would like.

And no matter their preference, using FP&A software prepares you with data accuracy and automations to produce the models, reports, and forecasts that a hands-on or hands-off CEO will benefit from equally.

Elevating the CEO-FP&A relationship

It’s so true that “there are not many people a CEO can turn to for sharing questions or doubts, or to get frank answers to tough questions” (Deloitte). That’s why I’m the biggest proponent of getting finance at the heart of the business. Finance leaders – and their FP&A team – have the rare opportunity to share the most important performance trends or strategic suggestions with their CEO to give clarity in the midst of a very noisy and lonely job.

FP&A leaders…we get it. Time is in short supply, but business needs are multiplying.  You’re struggling against the rising tide of manual processes, outdated systems, and the fear of formula errors. 

If you could eliminate tedious FP&A processes, what would you like to do more of? And how much could the business save? After all, you know the hidden costs of wasted time better than anyone else.

As your business gets more complex, comprehensive financial planning software automates time-consuming steps and enables successful expense and workforce planning. It makes your FP&A team and workflows instantly more efficient. Ultimately, it gives you back the time to finally focus on bigger goals like faster scenario planning and functioning as strategic business partners to P&L owners. 

So, here are the top things you can finally turn your attention to once you’ve got a modern FP&A tool as your sidekick. 

Modern FP&A software + your finance team = big strategic gains

Here are 5 things your finance team can finally accomplish after choosing an FP&A tool.

1. Business partnership

With the automation and time-saving from FP&A software, you can become the ultimate support team for budget owners. This happens when you engage in a deeper conversation and find ways to optimize, save, and problem-solve, leveraging strategic finance principles. 

Finance teams have the unique ability to influence business strategy through cross-functional connections and insights. No other leader can see (and understand) the way each budget fits into the overall plan. Finance business partners can understand the dependencies between teams better than anyone else. 

For example, increased sales could put a strain on the professional services team, who need to onboard and support those new customers. Or, the decision to pause a territory expansion will change the workforce plan that was built to support that expansion. FP&A teams are the ones who can see these changes, prepare for different outcomes, and inform the executive team of their options to keep the business on track. 

2. Give stakeholders self-service access to their financial data

FP&A software help finance teams to ‘get out of the way’ and be less of a bottleneck for financial data. 

Stakeholders can log into the FP&A platform and check in with their progress vs. the plan to inform their spending decisions. They don’t need to rely on finance to find out what they spent on vendors in the last month. 

It’s not just about easing the workload for FP&A, although that’s a great bonus. The real benefit is democratizing data and creating a culture of transparency and accountability. Each department leader can become more aware of their financial and operational performance, which leads to a more productive relationship with finance. You’re not just the bad guy dishing out consequences for overspending. You are their secret weapon to understand the implications of their spending decisions and find ways to optimize and improve every quarter.

3. Work from a single source of truth

Imagine a finance process without stale data or endless computer folders for all 35+ versions of the plan! When your FP&A software automatically integrates actuals from your ERP, HRIS, or CRM into your plans, forecasts, and analyses, you can confidently send off reports to board members without needing to quadruple-check for accuracy. The single source of truth prevents errors from sneaking in at any step in the process.

“In Excel, there are so many manual calculations. Having Stratify, the system updates automatically for us, and all our information is in one place. Everyone can see the same accurate, real-time data together.”

Tina Lai, Finance Manager, Spotnana 

Read Spotnana’s Story

With tracked changes in your FP&A software, you can include stakeholders in a more efficient and collaborative budgeting process, without the fear of important data being lost or copied over. Ultimately, access controls and integrated data give you freedom from one of the biggest FP&A headaches and fears. 

4. Enable better decision-making

A survey from the Association of Finance Professionals (AFP) showed that “very or extremely effective” FP&A teams were “significantly more likely” to have automated reporting and data visualization tools, as well as driver-based planning.  

An FP&A tool uses reporting automation and scenario planning tools to help you be one of those effective, proactive FP&A teams. The fundamentals – like producing month-end reporting packages – take far too long without the help of modern finance planning software. You’re left without any time to dig into the reports and find the story behind the numbers that will illuminate the situations at hand. Blind decision-making becomes nearly unavoidable. 

Scenario planning (within minutes on short notice) and enhanced analytics help stakeholders make informed decisions quickly. The executive team will begin to lean on finance as an irreplaceable asset to guide strategy, not just as a necessary part of running the business. 

5. Build a connected business expense plan

FP&A software puts the dream of a single, integrated business plan within your reach. Instead of adjusting assumptions across disconnected expense, sales, and headcount models, a change in one will carry over to the others automatically. These connections will naturally sharpen your understanding of operational drivers across the business and show clear ways to streamline spending (plus any downstream effects). 

For example, with an FP&A software that excels in workforce planning, you can finally get one of your biggest expenses under control by aligning on workforce data. You can include all key budget owners and work in sync with HR, without confusion from different headcount definitions and disconnected data. 

‍Learn more: Strategic Workforce Planning: 5 Tips for FP&A Professionals

A seat at the leadership table 

Less time writing formulas, more time delivering insights. 

If the five benefits we just covered sound like a dream, then it’s probably time to investigate modern financial planning and analysis software to see how quickly it can make a difference in your everyday workflows. 

Your finance team may not be generating revenue in the strictest sense, but you understand the underrated ways to increase efficiency and prevent costly errors through effective financial planning and analysis. Modern FP&A software lays the foundation for faster data reconciliation, modeling, and reporting, so you can jump into deeper analysis and find ways to drive operational efficiency that will translate into higher profits.    

There’s so much potential for FP&A on the other side of manual modeling and hunting down errors.

Ready to take the next step? Compare your options and find the right fit. 

Strategic headcount planning is essential to business profitability and success. It’s foundational, but that doesn’t mean it’s easy. It’s a complex process that involves every department, not just finance and HR. As the biggest operating expense for most businesses (up to 70%!), it’s important to make every position count. 

Many organizations develop a hiring plan and a budget to match, but reality rarely aligns with the plan. That’s why it’s so important for strategic FP&A teams to get a strong grasp on workforce metrics, align all stakeholders, and be prepared for the “what ifs” along the way. That way, FP&A can proactively guide business partners to understand better the fiscal implications of their headcount plan on overall business performance. 

Here are a few practical tips for a streamlined workforce planning process for finance teams.

5 Tips to make workforce planning more effective 

Tip #1: Align with HR on a single source of truth and plan assumptions.

Headcount is ever-evolving as positions are created or terminated, or as employees move on to new opportunities. You’re off to a frustrating start if FP&A and HR’s headcount numbers don’t match up. Unfortunately, that’s a common problem! 

It starts by understanding and aligning with HR on your headcount definition. HR’s definition may be broader, including contractors or part-time employees, while finance often focuses on full-time equivalent workers (“FTEs”). These different ways to count aren’t necessarily wrong, but it gets confusing for the C-suite when the two teams share conflicting data. 

Streamline your headcount analysis process by agreeing on definitions and the best cases to use different workforce metrics, and by capturing data accurately in shared workforce planning software. ‍

Tip #2: Don’t forget to include the whole management team.

Organizations working with a disconnected workforce planning process get stuck finger-pointing. HR gets blamed for bad data. Finance is pigeonholed as the bad guy recommending workforce cuts. Other department heads are blamed for unrealistic headcount wishlists. You need fewer frustrations and a synchronized approach. 

Your FP&A team needs intelligence on hiring timelines, training routines, seasonal workforce shifts, and new talent acquisition costs. That means business partners across all teams must be part of your workforce planning process. 

• Tap the recruiting team for their valuable knowledge of realistic compensation data and hiring timelines for your sector, to determine if the workforce plans are achievable or not. 
• Connect your financial analysts to each business unit so they can notice and suggest headcount tweaks that could solve problems or increase efficiency. 

But once you align on definitions, you still need to leave spreadsheet-based headcount reconciliation behind in favor of HRIS-connected, collaborative workforce planning software. This provides a single source of truth for all teams and the data-driven understanding of the present that is necessary to agree on a go-forward hiring strategy. 

Tip #3: Be prepared to scenario plan.

Strategic FP&A teams can give the answers to “what if?” when the question comes up. 

Headcount software with scenario planning capabilities allows your finance team to generate timely scenarios to evaluate the impact of adding or subtracting headcount, incorporating more part-time or contracted workers, and increasing benefits or wages. You can use these alternative plans to prepare for possibilities like an economic downturn, entering a new market, a new acquisition, or any other situation that would dramatically affect your workforce numbers.

These quick impact assessments will give your business partners the confidence to make business strategy decisions with a firm grasp of the pros and cons of any situation.

‍Explore More: Trends in Workforce Planning

Tip #4: Improve headcount analysis with workforce KPIs.

When your financial models for expenses and workforce are integrated, headcount analysis yields a more complete picture. You can make better, strategic recommendations to your CFO and other leaders because you’ll have all the important workforce planning and analytics data at your fingertips. 

Analyzing these metrics will help you spot trends playing out in your business and react strategically to increase the value of your existing workforce.

Be sure you can easily track KPIs like:

• Total cost of workforce (TCOW)
• Employee turnover rates
• Revenue per employee 
• Average time to fill a position 

Tip #5: Connect your workforce and expense planning.

Once your headcount planning and expense planning are integrated into one platform, changes in one plan will automatically drive changes in the other. There’s no need to account for implications separately. For example, if a new hire needs to be added to the forecast, related recruiting fee assumptions will automatically be added to the expense plan. 

This immediately improves the accuracy and consistency of your plans. It also saves a lot of time for your analysts. They can focus on assessing the business implications of changes or new opportunities instead of on tedious modeling and double-checking data accuracy across disconnected spreadsheets. 

‍Find the Right Fit: Top 5 Workforce Planning Tools for Strategic Finance

Make informed decisions with strategic workforce planning

More than ever, executive teams need data-backed guidance as they make headcount decisions. Once you’ve aligned with HR and other stakeholders and experienced the benefits of workforce planning software, your connected planning process will be stronger than ever. Then, FP&A can deliver greater savings for the business and the strategic advice that the leadership team needs to navigate today’s uncertain markets. 

When your headcount planning is streamlined, you’ll see clearly whether you’ve overspent or if you’re breaking even (and should invest in professional development), and whether or not you have the margin to hire additional talent. It will feel a lot less like shaking the Magic 8 ball, and the leadership team will gain confidence in both FP&A and HR to manage this key process. 

Want to compare your software options for workforce planning? Our article covers the best features and limitations of five leading tools. Compare strategic workforce planning tools.  

What’s the best way to describe your current annual planning process?

Messy? Endless? Frustrating? Stressful?

How about collaborative?

Leading businesses have cracked the code, completing their budgets in 28 days or less. And coordinated, collaborative planning is one of their secrets.

Imagine if the solitary uphill battle to produce your annual plan became a team effort where the budget was informed by insights on business performance and operations from every budget owner.

If you’re tired of a disconnected and drawn-out process where leaders start to throw out whatever numbers look and sound good without a plan to succeed…it’s time for a new approach.

Try these five tips to achieve a faster collaborative expense planning process.

‍Looking for the basics? Start here: What is collaborative budgeting?

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Tip #1: Implement regular check-ins

Start every planning season with a calendar. Strategic budget planning has a lot of moving parts, so you need attention to detail and some guardrails to keep everyone on track.

A planning calendar helps you work backwards from the date of your board meeting and set checkpoint meetings: 2 or 3 major stops to review your progress, and smaller meetings with budget owners to work through the numbers.

Regular check-ins will lead to fewer surprises along the way and alignment between FP&A and other teams.

Tip #2: Review past performance

Previous budgets will be a key resource for your next annual plan. Look through the lens of past performance for more productive conversations. Ask, “how did these elements contribute to our overall financial and business goals?” Then you & your stakeholders can craft a budget that aligns with next year’s goals, choosing to cut some elements, maintain others, and invest more elsewhere.

Ultimately, this makes stakeholder discussions more nuanced and productive. For example, if you know that your marketing team is happy with the number of sales leads coming from webinars, you can discuss the tradeoffs of possible cuts and find areas they could trim that would have the least impact on short-term demand. It is a more strategic approach than blindly requesting that they cut that program entirely.

Performance insights help you to be an involved business partner instead of a disconnected dictator suggesting arbitrary cuts.

Tip #3: Foster open communication

Ownership is an essential component of collaborative budgeting. If business leaders see finance as a bottleneck (or worse, as an opponent), they’ll be less likely to respect and support the annual targets and their budget.

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“When budgeting is a collaborative endeavor rather than an interdepartmental war, stakeholders will design more realistic targets and be more willing to compromise.” Perry D. Wiggins, APQC, for CFO.com

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• Be a listener. Leave each conversation with your business partners with new insight or a better understanding of their current challenge or primary goals.
• Empower and educate non-finance stakeholders to understand how their department contributes to the overall plan and targets.
• Use the features of your FP&A software for greater transparency and to step aside from finance as the gatekeeper. Help each budget owner access their part of the plan and provide input directly.

Tip #4: Focus on efficient FP&A planning tools

FP&A software for budgeting and planning will streamline the entire process and facilitate collaboration. It provides the single source of truth and eliminates version control issues, which is a major liability and a primary hesitation that finance leaders have with involving more people in the planning process.

Organizations who plan in Excel or Google Sheets understand the frustration of tracking down formula errors or changes made by a budget owner who meant well, but deleted key info or added incorrect data into the spreadsheet.  

“Midmarket FP&A teams often have 30+ different budget owners to engage with. Emailing different spreadsheets around to capture their input is painful.” Stratify Blog | The Collaborative Budgeting Process Your Finance Team Needs

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It’s important to find the right tool to support strategic budget planning. Stratify enables collaborative expense planning by directly engaging budget owners to respond to comments or questions, input into their own budget, all in a user-friendly interface.

Another side benefit? Switching or upgrading to collaborative budgeting software will give your analysts more time to connect with business partners. When they spend less time on manual and tedious FP&A tasks, they’ll have the bandwidth for important collaborative conversations.

Explore more: How to Use Workflows for Collaborative Budgeting in Stratify

Tip #5: Confidently compromise and problem-solve

Get comfortable with the give-and-take that needs to happen in order to approve the budget. Re-frame how you think about the planning process. It’s an opportunity to transform FP&A into a proactive driver of business strategy.

You have a superpower you can leverage; FP&A has the big picture of the entire plan. Budget owners know their own budget and goals, but can’t see others’ plans the way you can. Use your visibility to apply operational insights and orchestrate solutions across departments to solve their biggest challenges.

Moving forward with collaborative expense planning

We can’t guarantee a completely painless budget process, but with these five best practices, you’ll see a difference in alignment between business units and between the annual plan and company goals.

The best plans are informed by stakeholders themselves, and Stratify is the supportive FP&A solution built to empower your collaborative planning process.

Transform budgeting into a proactive, inclusive process that drives your business forward. Take a look inside Stratify planning workflows for collaborative budgeting in a personalized demo.

Success through revenue gains, sustainable growth, or expansion doesn’t happen by accident. Successful organizations know that their finance leader and FP&A team are key to that success through strategic financial planning. 

A simple search for ‘strategic finance’ on LinkedIn jobs yields 5,000+ results. That’s 5000+ businesses searching for someone who can lead with a strategic approach to traditional finance responsibilities. Why are so many organizations recruiting strategic finance professionals? 

Because there are difficult discussions happening in boardrooms right now. C-suite leaders desperately need insights to make decisions on workforce cuts, where to invest, and where they can save without derailing the business. 

Strategic financial planning is the best approach to survive current economic uncertainties – plus it adds business value in some surprising ways. 

What is strategic financial planning? 

Strategic financial planning is the continuous process where finance teams provide the analysis and advice to help budget owners and C-suite leaders minimize waste, manage resources, and achieve a company’s financial and operational goals.

Strategic financial planning answers the question: “How will our business plan and use of resources help us achieve the strategic goals and objectives set by our leadership team?” FP&A teams collaborate with business partners to create an annual financial plan that sets deadlines and budgets for each business unit to accomplish their part of the overall strategic plan. 

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“Strategic Finance is ultimately about taking a longer-term strategy and quantifying it, in a way that enables alternative future outcomes to be measured and evaluated so that optimal decisions can be made.” Michael Huthwaite, Director of FP&A at Walmart, for FP&A Trends 

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Some businesses have a dedicated strategic finance team adjacent to FP&A to focus on this process. But any finance team can become more strategic in their planning, reporting, and forecasting. It’s all about the approach: 

How do FP&A teams drive strategic financial planning? 

Strategic financial planning is impossible without each member of the FP&A team playing their role. From the finance leader to each analyst on the team, here’s how they put a strategic spin on every task.

The Finance Leader (Head of FP&A, VP of Finance, etc.) 

• Translate the business vision and goals into a comprehensive financial + operational plan 

Finance leaders take lofty goals from the boardroom and translate them into a concrete financial plan that every department can agree to and support, along with measurable KPIs. There are a lot of moving parts to oversee. 

Finance leaders are also responsible for identifying the right operational KPIs to measure business performance, and the operational metrics or drivers that have the biggest effect on financial performance.

Finance leaders should be the connector between the operational plans of different business units to ensure that they are based on common assumptions, and highlight the operational metrics from one business unit that will affect another’s performance. 

For example, the finance leader should know that the marketing and professional services team plans are both dependent on the sales plan. Or, that timelines to implement a new customer will determine how and when customer success steps in, and when to expect revenue from the deal.

Sensitivity to all these factors is a key skill for strategic finance leaders. 

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• Earn the trust of C-suite executives 

The finance leader needs to give the CFO and the rest of the leadership team a unique perspective on operational and financial trends, along with data-driven guidance. 

“One of my first steps as CFO of Docker was to get my FP&A team embedded within our business units. It was great to hear from my CMO that Raheem (my FP&A Director assigned to Marketing) was driving tremendous value. Raheem was diligently digging into operations data to see the performance and ROI on different marketing strategies and sharing that with Marketing. They saw his input as real partnership, not just oversight.” Brian Camposano, CEO at Stratify

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This type of partnership is only possible with a streamlined planning, forecasting, and reporting process; otherwise, too much valuable time is wasted gathering data and getting stuck in the spreadsheets with analysts. 

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• Confidently navigate into the future 

Finance leaders need quick visibility into performance and the ability to quickly generate new scenarios and share findings with leadership. The big-picture perspective of strategic financial planning helps FP&A teams recommend strategies to manage financial risks that could affect business performance. No other team has this level of visibility across the organization, so it’s up to a strategic finance team to assess macroeconomic factors and interpret how or when they may impact the business.

• Tell the story behind finance reports 

The strategic finance leader can provide the context and storytelling that brings typical finance reports to life. This includes pulling out key insights and trends, and distilling the top headlines to answer the question, “So what?” for senior leaders. Then, reports are much more likely to enlighten stakeholders and inspire action.

The Financial Analyst 

• Support department leaders and the Finance Leader as a business partner

Analysts drive strategic financial planning when they step out of their comfort zone to learn more about operational challenges for each department. They can feed these insights back to the Finance Leader for a better financial plan.
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• Share reports that work harder

Strategic financial analysts use reports to do more than just report. How? They can automate reporting using FP&A software to deliver those reports to stakeholders faster – and have time to identify insights that matter most. 

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• Ensure data accuracy to reduce risk ‍

Financial analysts are closest to the data, 24/7. In traditional FP&A, there’s a significant risk of inconsistent or incorrect data or faulty formulas leading to incorrect plans and reports. Strategic financial analysts use 3rd gen FP&A software to eliminate those manual errors and ensure data accuracy.

What strategic value do FP&A teams provide? 

When finance teams embrace strategic financial planning, some unexpected benefits will follow. There’s an opportunity to add value to the business in these surprising ways: 

1. Increased discipline within the finance team & business

The value of an on-time annual plan can’t be overstated. Without it, businesses will struggle to meet their goals. A strategic financial planning process requires discipline: sticking to deadlines, engaging with stakeholders, and spinning new scenarios as needed. And a more disciplined process will give you more margin for the inevitable twists and turns of annual planning. 

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2. A connected business 

Imagine a business where each department knows how they contribute to financial success and looks up to the FP&A team for guidance as strategic partners – not just as bad guys who reject spending requests. A strategic financial planning process puts finance at the heart of the business to unlock the potential of every team. 

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3. Financial plans drive actual success 

After a strategic financial planning process, financial plans will be more than wishful thinking (or ignored!). A collaborative budgeting process produces a more accurate annual plan and makes each department more accountable for their spending. Plus, the accuracy of a FP&A tool means cash flow and revenue forecasts will be more reliable and lead to better decisions. 

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4. Attract investors 

A well-developed, operationally-informed strategic financial plan is hard to ignore! Finance teams can help attract investors or new partners to the business with a planning process that delivers real results.

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5. A competitive edge  

Agility is a top trend in financial planning. Strategic financial planning puts the full picture in view to guide big decisions. It also sets the daily guardrails to keep all expenses in line with overall targets. This efficiency leaves margin for quick changes and saying ‘yes’ when a new opportunity pops up. 

Learn More: FAQs on the FP&A Process

Strategic financial planning success  

Strategic financial planning is fuel for business success. This means that the modern FP&A team is perfectly positioned to help business leaders succeed through a powerful combination of financial management and operational strategy. With a forward-looking approach, finance leaders and analysts can transform traditional financial planning into a dynamic process to help the organization achieve long-term goals.

It doesn’t matter the size of your FP&A team, or how high you’d rate your strategic finance abilities. As a finance leader, you need practical ways to improve. If your overall goal is to “become a more strategic finance team,” here are six main areas where FP&A teams get real traction when they shift their focus and take the next step.

1. Organize your data for strategic financial planning

You need a clear snapshot of the present to accurately forecast the future. It sounds basic, but finance teams of all sizes still struggle with data visibility and accuracy.

Duplicate data entries, missing information, and inconsistent formats will hurt your analysis and yield unhelpful reports. You need a baseline of clean, accessible data before moving on to the next steps of deeper analysis and visualization. If this is a challenge for your finance team, you can support your CIO to refine a data strategy to provide the flow of ‘clean’ data you need. 

To level up, find your next step to improve business data: 

• Integrate ERP, HRIS, (and eventually CRM) data into an FP&A software solution to ensure that your team has real-time access to all important business data – no more .csv and spreadsheet headaches. 
• Choose a tool with analytics features to spot trends or anomalies in your data. 
• If you already have these capabilities, explore advanced analytics tools like AI-powered predictive modeling and data visualization to prepare for future scenarios. 

With real-time, well-organized data integrated into an FP&A platform, your CTO or Head of Product can directly access reports and monitor their department’s spending against the plan. This gives your strategic finance team more time and energy to shape business decisions instead of cleaning up data or building forecasts with inaccurate numbers.

Learn More: What is Master Data Management? (And Why is it So Hard for FP&A?)

2. Champion collaboration as a strategic finance business partner

“50% of CFOs see C-suite collaboration and establishing finance as a business partner across the enterprise as a top priority.” (PwC)

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If only that number were 100%! At any size and stage, business partnership is a key way to increase the strategic value of your finance function. Try these ideas: 

• Support your finance team to implement stakeholder engagement plans to guide their communication and interactions with each business leader based on their level of investment and priorities. 
• Offer professional development opportunities to your analysts. Help them step out of their comfort zones and leverage every stakeholder interaction to learn more about the business to improve budgeting, forecasting, and resource allocation.

Introduce workflows for collaborative budgeting to get more efficient in your process. Make it easy and secure for budget owners to proactively participate in planning, all while Finance remains in complete control of the process.

3. Focus on risk management

Your FP&A team needs to balance business growth with financial sustainability in every decision. Look to your risk management practices for small ways to add big strategic value in uncertain economic times. 

• Be sure your FP&A tool supports scenario planning so you’re prepared with options and your response, no matter how quickly the economic forecast changes. 
• Get more acquainted with operational drivers for your business, across every department. Take these insights and find practical ways to increase cash flow, like optimizing, exploring new revenue models, and cutting indirect costs. 

Choose security-first FP&A software with industry-compliant controls, encryption, and customizable access levels.

4. Increase financial reporting frequency

A lengthy analysis and reporting cycle will slow down strategic decisions in your organization. All FP&A teams can benefit from faster times to analyze data and report to stakeholders. To grow as a strategic finance team, find ways to increase your reporting and forecasting speed. 

• Identify and measure your KPIs for financial performance and create live dashboards for stakeholders to monitor in real time. 
• Find the ideal rhythm of reporting and forecasting for your business. Automations within an FP&A tool can generate budget variance reports and create your month-end reporting package in minutes, not weeks. 
• Be sure your reports are readable and tell the compelling story behind the numbers. 

5. Build business agility

A stronger strategic finance team will position the business for long-term success. When time is of the essence, the ability to produce a new forecast or provide historical data can enable or hinder strategic action. Achieving simple scenario planning should be a top priority for your finance team. Many teams are working with a time-consuming or non-existent process of scenario planning, often driven by a reliance on spreadsheet modeling (see image below). Planning for any outcome and comparing versions without breaking your financial models is an essential component of business agility.

• If delays have been a struggle for your finance team, get laser-focused on producing your annual budget on time. 
• Empower stakeholders with self-service access to the financial plans. They can check their spending against the plan and make wiser decisions with finance as the facilitator, not a bottleneck.
• Search for ways to automate your FP&A processes as much as possible. Monthly reporting packages, headcount reconciliation, BvA analysis are all examples of reporting that can be automated. You’ll have more time to respond to market forces or make changes to your plan at a moment’s notice.

6. Integrate modern FP&A software

Finance teams at any stage need a defined technology plan to meet the demands of strategic finance. This starts with a needs assessment and understanding of your current tech stack to see how FP&A software would fit. Spreadsheets are still a go-to for most FP&A teams, but you should take a close look at the sophisticated cloud solutions that offer the flexibility of spreadsheets without the common frustrations. 3rd gen FP&A software options are user-friendly with a driver-based approach to planning, no expensive consultants needed. 

For example, the right FP&A software can make a big difference to your workforce planning process – a huge portion of business expenses. Organizational success depends on getting it right. Technology improves the process with automations to help you reconcile new hires and terminated employees, add a planned position, or backfill positions in a few clicks. You can leverage detailed assumptions in your workforce plan for comp, benefit expense, employment tax, and more in an easy, plain-language interface. 

Learn more: The Top 5 Workforce Planning Tools for Strategic Finance 

When you find the ideal FP&A tool for your requirements, strategic value will skyrocket. You’ll have the data at your fingertips, modeling and forecasting in a fraction of the time, better stakeholder reports, and more time to get to know your business.

Small steps from basics to business impact 

As a finance leader, you have the responsibility and the opportunity to build a more strategic financial planning process. These practical steps to grow in data, collaboration, risk management, reporting, agility, and technology will add up to a substantial shift in how your finance team influences business strategy.  

Looking for more practical advice to improve your finance team and have greater business impact? Dig into the CFO’s Guide to Scaling Strategic Finance for a framework to assess your process and find your next steps.

Navigating the ever-changing business landscape demands precision and agility in forecasting, but it hinges on seamless collaboration between Finance and various stakeholders responsible for the budget.

The main challenge in collaborative budgeting is its inefficiency. Creating an accurate forecast means tapping into insights and experiences from many stakeholders across the business. However, the traditional approach often involves the cumbersome process of sharing spreadsheets, leading to manual and tedious efforts. Moreover, sharing a financial model with stakeholders can introduce multiple risks, including unauthorized data access and a lack of clarity on who made specific changes. In the end, this consumes valuable time that could be better spent on strategy.

Brian Camposano, CEO of Stratify, notes, "FP&A teams should spend their time analyzing data and providing valuable insights for business growth and cost savings. Instead, they get bogged down in time-consuming administrative tasks, like manually orchestrating a data collection process for budgeting." 

Stratify has responded by introducing a powerful solution within its financial planning and analysis software to address these challenges.

Solution: Workflows for collaborative budgeting

Stratify workflows, which automate tasks within the software, streamline budgeting and forecasting. Our goal is simple: make it easy and secure for budget owners to proactively participate in planning, all while Finance remains in complete control of the process.

Here is how workflows make the budgeting and planning process efficient and secure:

In Stratify, Finance assigns planning tasks to key stakeholders, often department heads or business unit leaders. These stakeholders provide their insights and budget assumptions, with the ability to see the impact of those assumptions before submitting them back to Finance.

Stratify’s delivered, configurable business logic makes this possible. There are no complex formulas to decipher, so Finance and stakeholders can plan assumptions in clear business language. 

Finance sees the status of all assigned tasks in one central location. A finance manager can accept stakeholder input or engage in an in-app dialogue until they align with the budget owner. Stratify also handles version control seamlessly, ensuring everyone collaborates on the same plan with up-to-date information.

Stratify's platform streamlines data gathering and exchanges, allowing finance professionals and department heads to focus on strategic discussions.

Now, let's dive into a practical demonstration of how this feature operates.

A workflow example in Stratify

All Tasks hub for finance managers

To gather input for the FY24 budget, Anna, a finance business partner, has assigned workflow Tasks to each of her business unit leaders, or stakeholders. These Tasks are grouped together into a Stratify planning Activity, which she has named “FY 2024 Budget.” 

In this case, each Task requests her stakeholders to review and edit a set of departments and associated general ledger accounts she has scoped for them. Let’s look at the Task assigned to John, the Sales Ops Manager. 

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Stakeholder reviews an assigned budgeting Task  

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John, the Sales Ops manager, receives an email or in-app notification that Anna would like him to provide input to the FY24 Budget. He's asked to review a number of expense items, and some include comments and questions from Anna at the line item level.

John starts the Task, and easily adds, deletes, and modifies various expenses based on his first-hand knowledge of the CRO’s plans. 

For example, John knows that Field Sales plans to do more in-person meetings, so he adjusts the assumption for Field Sales Travel & Entertainment from $1,500/month to $2,000/month per sales headcount. John also leaves Anna a note explaining the change. 

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John can also add new expenses, like a $12,000 software contract, that he allocates over twelve months, or a new line item for a training event in March. 

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When he’s done reviewing all line items, he takes a look at the impact of his work. For example, John can see how his new proposed budget compares to prior year actuals. He can also see a change log of all his activity, and can provide a note to Anna summarizing his proposal. He then submits the Task back to Anna for review. 

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Finance manager’s approval of the submitted task

When Anna reviews John’s submitted Task, she too can see the impact of John’s proposal and the log of every change John is recommending. She has the option to comment back to John and continue their collaboration on these accounts, or approve the Task.  Once they are in alignment on plan assumptions, she approves the Task and marks it complete.

‍Completing an Activity

When Anna has finished this process with each of her stakeholders she marks the plan Activity complete. Each stakeholder’s assumptions are incorporated into the budget. Stakeholders can access their assumptions, but they are no longer editable.

Stratify’s task-based workflows power efficient, coordinated planning

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With Stratify, Finance teams are able to orchestrate a truly collaborative and coordinated planning experience.  No more tracking down stakeholders, interpreting bespoke spreadsheets, or navigating version control issues to arrive at a final plan.  Stratify workflows remove the inefficient, manual processes that bog down organizations, and allow both Finance teams and business stakeholders to focus on higher value activities and execution.

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With headcount and workforce expenses comprising such a large percentage of business spending, a finance-led approach to workforce planning is non-negotiable.

These 5 emerging trends are changing the future of the workforce planning process. Workforce spending is more than a line item, it’s a critical factor in hitting or missing organizational goals.

FP&A leaders: how have these trends already influenced your strategy and decision-making process?

5 Workforce planning trends in 2024

‍1. Riding the economic rollercoaster requires agility

Many businesses now employ a blend of office-based and remote employees, so workforce planning needs to be more flexible to hit revenue goals. Analysts need to identify different KPIs to monitor remote workforce costs compared to in-person (varying retention rates, for example).

Economic uncertainty has affected headcount and hiring plans across multiple industries. FP&A needs to collaborate effectively with all departments and provide data-backed forecasts and recommendations to adapt to these changes.‍

2. AI improves the planning process

Enterprise-level strategic workforce planning tools have included AI to assist with predictive analytics and tailored salary models. AI can dissect workforce data and suggested tailored training paths for employees to build new skills (which is more important than ever, as you’ll see in trend 3).

Smaller teams without an enterprise-level FP&A tool can still apply AI to improve efficiency in their interview or onboarding process. Machine learning algorithms can automatically deliver the next pieces of content in an onboarding sequence, or sort through resumes and applications. Those resource-saving efficiencies are music to the financial analyst’s ears!

3. The rise of the contractor

Contracting isn’t just for the gig economy anymore; it's growing more popular in the corporate sector too. The growing preference for freelance and contract roles demands a strategic response from finance teams.

There are costs and benefits to weigh. Scalability and flexibility are bonuses, but possible issues with low engagement or retention rates could negate any profits. FP&A teams also need to pay close attention to the different compensation structures for ‘gig’ workers (who are often looking for the most competitive pay) into their workforce capacity planning.

4. Skills gaps require investment

87% of organizations know they have a skills gap or will face one within the next few years. To prevent high turnover and missed strategic goals, leadership teams need to prioritize employee upskilling and training. FP&A teams should advocate for budget allocations to training initiatives to build a robust and capable workforce for business changes that lie ahead.

5. A growing multinational workforce

Remote work isn't just about working from home. It has opened doors to a worldwide talent pool, even for single-location SMBs. But this global reach introduces considerations like time zone differences and cultural nuances. Finance teams will play a vital role in managing the quantitative aspects of the multinational workforce expansion by focusing on metrics around productivity or seasonal workforce availability and capacity.

FP&A teams should lead through these changes, but challenges remain.

Your team should pay close attention to these trends to increase the strategic value of your workforce plans. Planning all starts with a data-driven understanding of the present, but integrating and reconciling critical data in ERP and HRIS systems is a pain for analysts. This time-consuming step leaves almost no margin for you to pull back and consider the implications of macro trends, draw useful insights from the data, and convey that to stakeholders.

Improve workforce planning and analytics with a strategic tool

Workforce planning software is one of the most valuable resources that strategic finance teams can use to manage the headcount analysis process.

Tools like Stratify offer vital organization, data integrations, automated reporting, headcount reconciliation, and collaborative planning features that make workforce planning a much less frustrating process. These tools streamline the tedious manual work so you have time to make observations and provide strategic recommendations based on actual workforce performance.

These tools prepare your team for whatever trends are coming. For example, agility is much more attainable when you can re-forecast and produce different workforce plan scenarios in a fraction of the time. And these tools are exactly what you need to survive the economic roller coaster, acting as your source of truth on actual workforce spending as you balance headcount, contractors, and varied compensation structures. No more headaches trying to figure out who gets what and when.

As these trends begin to change headcount and workforce costs, FP&A teams should find the right toolkit to effectively manage their workforce data and support business partners with strategic advice.

Compare options and find the best fit for your organization: The Top 5 Workforce Planning Tools for Strategic Finance

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