Being Planful: Helpful FP&A Resources to Navigate an Uncertain World

Being Planful: Helpful FP&A Resources to Navigate an Uncertain World

The upcoming planning season will likely be stressful due to continued uncertainty. Cash preservation is still the recommended priority, but so is a complete rethinking of the financial planning and forecasting process. Playbooks that worked in past years will likely be obsolete this year. Since no one can accurately predict the future, flexibility and agility continue to be valuable assets for any FP&A team. But, on the bright side, companies have stockpiled so much cash that many are looking to put it to work.

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

Forbes: What CFOs Are Prioritizing For 2021: Liquidity, ESG, And Right-Sizing For The Future

“Cash, sustainability and clairvoyance” are the CFO priorities these days, especially as 2021 planning begins. Cash will always be king, of course, but the post-pandemic reality is essentially unknown. The lack of digital transformation also exacerbated the pain of transitioning to remote work for many companies. Both of those should be top CFO priorities. “Changing tomorrow starts now – and should have started yesterday.”

Ernst & Young: How to improve your forecasting in a constantly changing world

Many companies will need to rethink their entire approach to forecasting in light of COVID-19. Those starting with existing models could put their entire recovery at risk. Taking a hard look at new customer behaviors is critical, and data inputs should be scrutinized to avoid reliance on old data or assuming current data is indicative of future trends. “(F)orecasting must become a core competency, with an emphasis on analysing data from multiple and sometimes novel sources, to understand not only your customers’ plans, but also the potential change in who your customers are and how you deliver value to them.”

CFO: Metric of the Month: Uncollectable Balances as a Percentage of Revenue

Bad debt is a fact of life this year. But how much is too much, and does that change during a pandemic? It is likely bad debt has increased for most companies, so it’s important to continue tracking this metric as the pandemic wears on. “(K)eeping a high-value customer might make it worth accepting slower or lower payment as you and your customer work through the economic hardships of the COVID-19 crisis.”

CFO Dive: Sequoia Capital exec: CFOs must be master storytellers

CFOs must focus on the story behind the numbers to weave a tale that makes clear the ultimate conclusion as well as the path to get there. Simply talking about the numbers does little to build enthusiasm or change behavior. “Any finance professional who rises to the level of CFO has mastered the technical parts of the job. The differentiator is their ability to move the organization in one direction or another.”

WSJ: After Stockpiling Cash, Some Companies Are Looking to Spend

Cash holdings by U.S. companies have increased by roughly 25% since the end of 2019 and CFOs are eager to spend it. Some are looking to invest back in their business, but, with so many companies in financial trouble, M&A activity is likely to heat up. “The coronavirus pandemic has created a divide between corporate haves and have-nots, with some companies building on existing stockpiles of cash and enjoying access to cheap debt, while others are struggling to survive.”

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.

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