I’m always searching for new ways to communicate the practical value of strategic finance to anyone who’ll listen. Recently, I read a refreshing take on FP&A’s potential that has stuck with me ever since:
“FP&A [is] the financial heart of the company…It pumps information through arteries to the other departments; it receives information back from the departments through the veins about what’s important to them.”
This is a transformative approach. An FP&A team that thinks and acts as the heart of the business will be an invaluable partner.
I keep coming back to Carl’s quote, so I wanted to share why it rings true, how I’ve seen it in action, and why it’s a necessary mindset shift you need to adopt.
The analogy just works. Like a body, a business is a system made up of units with cross-dependencies. Your budget – and really everything you do as a finance team – must consider the interdependencies that exist between different business units.
FP&A has the potential to connect insight to action in every area of the business. But I have seen plenty of organizations where finance is sidelined – bogged down with time-consuming manual processes - and business units are left siloed off without vital connections. The heart-pumping flow of information is not happening, Finance is left out of the conversation when big decisions are made, and business growth is stunted as a result.
At Stratify, we talk a lot about “the way the world should work” as a driving motivation. We want to see a world where FP&A is the heart of the business, facilitating the bi-directional flow of financial and operational insights in real-time.
The analogy of the heart captures this vision where Finance excels in strategic partnership and supports other business leaders with real-time access to relevant data they need to make decisions and grow the business effectively.
When you’re acting as the heart of the business, your FP&A team can unlock this potential. You can be the vital organ that supports the entire system to function optimally by informing and equipping other stakeholders.
Over time, I’ve discovered that operational engagement is often the missing link on an FP&A team’s journey to executing strategic finance. Business units often don’t know in detail how their individual plans sync and affect each other. But FP&A has the ability to optimize financial outcomes for the business by helping to optimize operational performance across the organization.
Want to strengthen your finance-operations connection?
I believe that the best financial plans are informed by business partners themselves. That’s why you need to invite other stakeholders into the real-time process. This philosophy underpins the Stratify platform, which is designed to provide an intuitive and secure way for all stakeholders to contribute and see the plan through strategic finance glasses.
It’s not enough for just Finance to think strategically. You have to equip others in the business to think that way too. With direct access to relevant data (plus your big-picture perspective and analysis), other business units will start to think, “I should start planning for X or Y scenarios now.” Or, “how can I ensure that we have just enough capacity to support the number of customers that the sales team plans to sell to?”
A key differentiator of strategic finance is the ability to predict downstream outcomes and the possible cross-departmental impacts of big decisions. As businesses grow more complex and hungry for valuable, data-driven insights, an integrated approach to strategic finance and operational engagement is the surest way forward. Adopt this mindset, and you’ll become the driving heartbeat of success.