Some of the best business lessons can be learned from the world’s greatest athletes. Picture Muhammad Ali: he was quick on his feet, had superb reflexes, and could deliver a mean left hook faster than the speed of light. He wasn’t the biggest or the strongest boxer of his time, but he used his speed and agility to outmaneuver and outlast his more powerful opponents.
And although finance is entirely different from the world of boxing, the lesson remains the same: an agile approach is critical for helping organizations grow faster, become more competitive, and thrive in a rapidly changing and unpredictable business environment.
Here are five steps you can take to create an agile finance function.
Microsoft Excel is not the best long-term solution for finance teams. Excel was designed for personal productivity and isn’t set up to support budgeting, financial planning, reporting, and complex financial modeling.
In addition, Excel can’t grow with a business. Once spreadsheets reach a certain size and complexity, it is difficult to manage the data, which makes planning and reporting difficult or impossible.
On the other hand, a Continuous Planning platform is designed to grow as the business evolves and to improve the accuracy and reliability of financial planning and analysis (FP&A) processes. A Continuous Planning solution like Planful also allows users to leverage Excel as a front end but with a more secure and scalable back end.
Continuous Planning platforms are preferred over manual spreadsheets because they provide granular insights into all areas of your business, including overall cost and profitability and projected sales and revenues. These types of details can be used to make agile forecasts that will help your business respond to changes in the market while supporting growth.
A cloud-based Continuous Planning platform is a better option than on-premises or “on-prem” solutions. This is because the cloud offers a faster time to value and lower cost of ownership. On top of this, non-cloud-based solutions lack the security, workflow, and control required for rapidly growing small or mid-sized organizations.
The benefits cloud-based Continuous Planning offers vs. on-premises solutions include:
When you move to an agile Continuous Planning platform from a spreadsheet system, you’ll see an immediate improvement in key financial processes, like the financial close process.
A Continuous Planning platform can manage all aspects of the process by consolidating finance and operational results into a single platform. Once in a single platform, finance can collaborate across the business and communicate through a consistent, up-to-date channel.
For example, companies that reduce the financial close and reporting process from 25 days to 5 or 10 days can deliver financial results faster to internal stakeholders.
This, in turn, allows more time for review and analysis before reporting results to external stakeholders. And because a good relationship with external stakeholders is vital to a business’s long-term success, many corporate finance departments prefer quick delivery of financial results to external stakeholders—especially when reports include positive news. Communicating the financial results is accelerated, which enables finance to move beyond asking, “What did we say we were going to do?” and moving towards asking, “What are we going to do about it?”
Rolling forecasts are a key component of an adaptable organization. If your business is growing quickly, a static budget will be unable to provide the flexibility and agility needed to reflect finances accurately.
With rolling forecasts, finance leaders are able to constantly view 12 months into the future, allowing them to focus on the current year while keeping an eye out for the following 3-12 months. This real-time analysis and dynamic approach to strategic planning helps create an agile operating model that allows businesses to respond to changing conditions, capitalize on new opportunities, and improve resource allocation.
By harnessing the power of digital technology, CFOs can automate and eliminate the complexity of tasks, reduce stress on team members, and uncover opportunities to keep up with the rapid pace of change in the industry.
Artificial Intelligence (AI)
Through AI, finance teams can spend less time on spreadsheets and more time making important strategic decisions. Specifically, AI can sift through mountains of data to find errors, outliers, and trends that humans would likely miss. This brings more accuracy and efficiency to the role that can “improve financial forecasts, highlight anomalies, and provide increased decision-making confidence.” In our blog, we’ve identified nine other ways that CFOs and finance organizations can put AI in finance to work today. Finance teams that leverage AI can focus their finite resources on high-value activities.
Smartphones and tablets provide finance an opportunity to deliver financial operating results along with key metrics and KPIs on a timely basis to top executives, managers, and the business.
You can even enable mobile workflow and approvals for budgets and forecasts, as well as data entry via mobile devices. This is a great way to improve the agility of the organization and for finance to be a true business partner to top executives and managers by delivering critical information anytime, anywhere. Budgets and forecasts shouldn’t happen in isolation; rather, they should be collaborative, connected and fully focused on driving partnerships across the business.
For small or mid-sized organizations that are growing rapidly, steps 1 and 2 are critical to improving finance agility and having more scalable business processes. But whether you focus your improvement initiatives on the financial close or the budgeting and planning process depends on your own situation and priorities.
To learn more about these agile finance function best practices and the benefits our customers have achieved from implementing them, read our whitepapers and customer case studies on business agility: