Financial planning & analysis (FP&A) is truly having a moment in the spotlight. How many times recently have you heard the word ‘unprecedented’ batted around in relation to finance? In such a volatile sector and season, it’s easy to dismiss trend forecasts and assume that they’ll be re-written within days or weeks.
But the trends matter more than ever. Why? Because FP&A teams are the key players in a new movement combining strategy, data, and collaboration. With support from solutions-driven technology, your FP&A team can support the business to make wise decisions during uncertain times – paving the way for a new type of strategic finance that boardrooms are eager for!
Take note of these trends, each one is one facet of the wider shift and might be just the thing you can apply in your context for greater success.
So, to cut through the noise, here are the top 7 FP&A trends to watch and incorporate to your strategy in 2023.
This has been a seismic change in the FP&A and corporate finance world. Historically, FP&A professionals were expected to be Excel magicians, creating complex formulas and models to report and forecast for C-suite decisions. They took a supporting and transactional role, working as quickly as possible with the tools and data at hand to deliver requested models and reports.
But now, FP&A has taken more of an advisory role offering significant value to the entire business through a more unified approach to finance. FP&A teams have been invited and expected to partner with executives to analyze and interpret financial and operational data in relation to overall business impact and decision making.
You can almost hear the collective sigh of relief from FP&A teams! Many of the tedious and repetitive aspects of the job can be effectively automated, helping you shift to spend the bulk of your time on higher-value tasks and projects. But just like any type of change it can be hard. Shifting from excel wizardry and functioning as a gatekeeper to a data driven operational strategist impacting the growth of the business, requires a shift in mindset and skills for financial executives.
Lots of organizations struggle to connect siloed departments to the wider financial picture. With a more strategic approach, your FP&A team becomes the glue between finance and operations, helping each department to see their connection to the vision and financial goals of the whole business.
This year, make it a goal to define the strategic areas where your FP&A knowledge could contribute to wider business decisions or goals. Then, be sure you have the foundation of effective FP&A tools to make aggregation, forecasting, sharing, and collaborating on finance a much easier process for all!
All you need is a quick glance at human history and culture to understand that we’re driven by stories. Stories help us to make sense of the world around us, our place in it, and to explore new ideas.
A vital trend currently brewing is the role of storytelling in financial planning and strategy. But before you get worried about delivering a monologue at the next board meeting, what does storytelling look like in corporate strategic finance?
“The introduction of third generation finance tools has enabled financial analysts to step out from behind the numbers. Now they have the time to communicate the story of the broader financial outlook to the whole organization.”
-Nathan Skelton, VP of Product, Stratify.
To embrace the storytelling trend, begin with honest evaluation: does your FP&A team have the time they need to interpret data and communicate it cross-departmentally? Does your finance software automate the data aggregation process to be the foundation for storytelling?
Once your teams no longer feel like they’re playing catch up with reconciling numbers, they can give greater attention to the story lines driving your organization. Plus, confidence is a big piece of FP&A storytelling, so choosing the right FP&A software ensures your team is working from solid, accurate data that unifies departments.
Data, data, data. You’re managing mountains of it from finance, CRM, marketing, and every software tool in use. What’s the result? It’s difficult to connect the data across platforms and tell a cohesive story.
That’s where the adoption of AI and machine learning can give finance teams an edge in connecting all the data, finding trends and insights.
These are a few ways AI can enhance your FP&A projects in 2023 and beyond:
It’s time to say goodbye to endless ‘versioning’ and circulating documents! Organizations are relying on accurate and near real-time data and numbers to adjust and make changes at the speed of business. That’s why FP&A teams will be laser-focused on strategic agility this year, growing their capacity to cope with change.
Analysts have to wait until the books get balanced before they have data to analyze and share. After that a lot goes into wrangling data silos and legacy spreadsheet tools to reconcile actuals with forecasts. This leaves an unfortunate gap in the middle of each period where insights into revenue and expenses are more of a waiting game. How common is this problem? Typically we see analysis and reporting cycles that take 1 - 2 weeks!
FP&A can adapt to the agility trend with the support of the right FP&A software. When books close or plans change, automatic updates will reflect the latest numbers. This makes it infinitely easier for FP&A to provide strategic advice for decision-makers to act on.
Look for tools that:
With modern FP&A platforms, there is no pain in updating forecasts with the latest information so continuous planning is possible.
Despite corporate budgets cuts in multiple areas, teams will still recognize and prioritize the importance of financial software spending in 2023. In fact, the next-generation of finance is being driven by the convergence with data science, according to this article on the evolution of finance and tech stack.
Why? Because budgeting and forecasting software and workforce planning software are laying a foundation to enable future business growth. As we’ve mentioned, a more strategic FP&A approach requires accurate, shareable data to support a collaborative planning process.
But there is still plenty of room for discernment, since not every tool will be the best fit.
If your FP&A team still leans on Excel, but struggles with version control and with constant reiterations, it might be time to find a tool that will serve you better.
What’s the key difference between legacy tools and next gen FP&A software? Agility is a key differentiator. The right budgeting and forecasting tool will actively support positive business outcomes like savings and growth. It will give you the freedom to be a strategic collaborator and streamline the process of gathering inputs from all departments in the business. Next gen software solutions recreate your plan using underlying business logic that is used by all customers. It is a modern approach that helps finance departments get up and running in under 2 weeks. Because the plan is now created using configurable logic, making changes is easy and doesn't require professional services.
How quickly can your finance team gather data, run custom reports, analyze, share with stakeholders, and advise on urgent decisions?
Only 19% of FP&A departments can run scenarios in less than one day, and 26% are unable to run scenarios!
Constant change has created its own trend: financial planning cycles are getting shorter and shorter, to a near-continuous forecasting process. In order to embrace this trend, finance teams need quick, accurate numbers and a flexible platform to support more efficient forecasting.
“It’s so important now to forecast to operational levels and create a baseline predictability for short-term decision-making.”
-Brian Camposano, CEO, Stratify
Another way you can adapt to shorter planning cycles is to reduce the level of complexity in your reporting: simplify and automate!
There are more meaningful ways to collaborate across your business than emails and spreadsheets. We all understand the inherent limitations of emails and spreadsheets, but it is still so easy to get stuck there with a lack of clarity and miscommunication.
This year, FP&A teams will put an emphasis on effective collaboration and coordination. How? By relying on FP&A software to connect stakeholders across the business to the strategic financial plan.
In order to connect the finance team to support operations, finance needs a simple way to collect important data from different departments. If your team uses bespoke, complex Excel models, it may be difficult to encourage collaboration and collect information in a way that makes sense to other departments.
Look for FP&A software that allows non-finance users to proactively contribute to finance workflows. They should be able to monitor real-time financial and operational performance so all departments are working together – all while putting security first through permission-based access controls.
There’s a clear theme connecting all the trends in this list: the need for agility, efficiency, and strategy for the future of FP&A.
The shift in the role of finance has been dramatic. All of these trends highlight the importance of evaluating your approach through a new lens. It’s clear that a modern FP&A team will have a significant impact on the entire business, so what is standing in the way of your more strategic and collaborative future?
It can be summed up in a question:
Have you found the best FP&A tools to meet the challenge of the moment?
Stratify is the FP&A platform that enables data-driven collaboration with business partners.
“Our passion is to help you to embrace the FP&A time flip. Imagine a month where 70% of your time goes to analysis and strategic storytelling, instead of 70% tedious data aggregation and report creation.”
-Quy Dong, Director of Customer Success, Stratify.
With Stratify, you’ll have:
We’d love to show you the difference with Stratify supporting your strategic finance process. Get in touch for a personalized demo and a glimpse into your strategic FP&A future.
Ready to get started? Get in touch with our team today.