Our fickle reality continues to push and pull FP&A forecasts based on the latest data and outlooks, underscoring the need for an agile and flexible planning effort this year. To meet these needs, many CFOs reacted to the pandemic by investing in technology for Finance. One surprising outcome of this investment has been an optimistic business outlook. Those happy CFOs are viewing uncertainty as an opportunity, and have taken to reimagining their planning processes for the months ahead.
Here are a few expert opinions we’ve found helpful in the past week, and we hope you do, too.
What the Experts are Saying on FP&A
CFOs have looked to finance technologies to solve pandemic-related issues. A recent survey found it’s also helped them prepare for a future of continued uncertainty. Nearly three-quarters of CFOs say finance software improves agility and remote work, but also accuracy and, more tangibly, cash flow. What’s missing, CFOs say, is artificial intelligence and machine learning that can replace manual tasks. Regardless, investments in FP&A tech seem to correlate with expected success. “Sixty-five percent of respondents who were enthusiastic towards adopting new technologies expect their company to grow over the next 12 months, while only 11% of respondents less enthusiastic about technology expect the same.”
For a change of pace, here’s a podcast episode that explores how Finance can find opportunities for improvement amidst disorder. Incorporating finance technologies into processes is a fast and effective way to rise above some of the commotion, but it also gives Finance more time to focus on the strategic aspects of the job. “Digitizing processes is where the most value can be unlocked.”
Financial Management: Making strategic planning relevant in an uncertain world
The traditional approach to planning becomes less effective as more uncertainty enters the picture. But having a realistic and resilient plan is critical for bringing focus to organizational efforts, especially in today’s climate. Resilience comes from planning for a wide range of potential scenarios, which provides agility as situations change. Being realistic might mean pulling back from 12- and 18-month plans to create shorter-term, but more credible plans. “Through a blended process of innovative thinking, rational planning, and realistic financial modelling, organizations can create a living strategy that adapts to change while staying true to the mission.”
CFO Dive: Outward-focused finance team essential
FP&A is always working to increase the financial IQ of the business, but it’s just as critical for that knowledge transfer to work both ways. The CFO of Siemens USA, Marsha Smith, takes that to heart, having pushed her team to understand contract terms, explore risk management, and even learn how to speak with customers. During the pandemic, that mindset kept her focused on customer and employee satisfaction in addition to financial metrics. “’If we manage to address satisfaction and product quality, our customers give us repeat orders,’ she said. ‘And if our employees are working the way we hope they’d work, we get projects and products out, on schedule and on quality.’”
Slowing job gains point to a longer recovery period than expected after the summer’s strong employment numbers. But while most CFOs are still optimistic about the next 12 months (see article above), a recent report expects 2020 holiday sales to be just marginally improved over last year. Retail sales, according to Deloitte, will increase by less than 1.5% year over year. One potential bright spot, according to the firm’s U.S. economic forecaster, could be that “reduced spending on pandemic-sensitive services such as restaurants and travel may help bolster retail holiday sales somewhat.”
Stay Tuned for More Useful FP&A Content
We’ll be continuing this weekly update with links related to how FP&A and CFO’s are leading their organizations through the continuing recovery. If you have comments, questions, or suggestions, please engage with us on Twitter, LinkedIn, and Facebook.