If we’re discussing hindsight in business, let’s use a particularly early example.
Pretend you own a business transporting goods by horse and carriage. You’re focused on finding a way to make your horses run faster or further. If you can figure that out, you’ll increase business.
Meanwhile, there’s a guy trying to build an automobile that would replace the need for horses. No one knows what a car is because that’s not even a thing yet, so you don’t waste another moment thinking about it.
Then one day a car whizzes by you loaded with supplies. You instantly see how it works and you instantly see the potential of your horse and carriage business drop.
Why did you ignore the potential of the automobile?
Instead of being open to the possibilities of the future, you were doubling down on your present state.
Next-Generation FP&A is Already Here
Just like the advent of the automobile, implementing financial analytics isn’t a “maybe.” It’s a sure thing, already being adopted by enterprise organizations.
Companies are leveraging financial analytics now; solving the puzzle of data to make intelligent, informed decisions. They’re using “cars,” not horses, and that puts them miles ahead of competitors still trying to figure it out.
Present State Financial Planning & Analysis
FP&A is useful in making high-level decisions like answering, “Did we have a good year or a bad year?” You gather your data, then you determine what you are going to do with that information.
It used to be enough.
Today’s reality requires you to not only understand all of what traditional FP&A (analysis) covers, but so much more. You need to answer questions that get deep down in the weeds.
Next-generation FP&A, where the “A” means “analytics,” focuses on understanding what’s happening throughout your business, where it’s happening, why it’s happening, and what are the opportunities to improve both profits and efficiencies.
Would that give you a head start on surpassing your competition, identifying new growth opportunities, or increasing cash flow? Sure it would. Next-generation FP&A is about empowering you to make better decisions in real-time.
Traditional FP&A Has Failed, but it’s Not Forgotten
Seemingly limitless data, unprecedented changes and layers of uncertainty introduced by the pandemic have strained the traditional FP&A model beyond its limits.
It’s imperative for CFOs and business executives to recognize, understand, and react to business trends in a timely manner. Speed in decision-making is essential in today’s market.
In a survey of CFOs, 49% reported that the biggest gap they’ve had in the past year was “the ability to execute with accurate, timely data that drives quick, informed decisions,” according to the 2021 Workday CFO Indicator Survey.
What is Financial Planning and Analytics?
Middle market and small businesses are struggling due to limited access to data and limited analytics and financial reporting capabilities. Even monthly reporting requires extensive manual data scrubbing and preparation. The process is cumbersome. Time to analysis is slow.
Financial planning and analytics leverages internal data sources and external data providing a holistic view of the entire business, including operations, sales, and other functions giving you a full and comprehensive view of the company. It’s streamlined, timely and possible.
Your FP&A Roadmap
Together with our partner, Onebridge, Anders CPAs + Advisors has created an open-access white paper as a guide for CFOs and business executives who want modernized FP&A methods and teams. Here’s what to expect:
- The top seven issues you’re dealing with today and how they threaten your business.
- A solution. Including the steps you need to take to get to next-generation FP&A.
- Real-world examples of businesses like yours that have put the new FP&A roadmap into action.
Don’t double down on traditional FP&A methods. Access the information you need to move forward with confidence rather than trepidation.
Download our Next Generation FP&A White Paper
This is the second blog post in our series on the Future of FP&A. Read our first post, Traditional FP&A is Failing. What’s Next?
