It’s encouraging to find fewer articles on how FP&A can deal with fallout from the pandemic. Themes are shifting to planning for the future, keeping employees happy, and, in a welcome yet boring return to some level of normalcy, taxes. There’s even talk about adding things to the CFO’s plate, like tracking corporate goals on broader environmental and social issues. The one constant, however, is the continuing uncertainty around everything from global economic direction to, well, taxes. At the center of it all is FP&A.
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
Deloitte / WSJ: Anticipate, Test ‘What If’ Scenarios With Analytics
Executives expect change and uncertainty to continue. But they’re also using 2020 as a guide for dealing with tomorrow’s uncertainty. Scenario planning, modeling, and what-if analysis are all critical tools for helping teams think through and prepare for possibilities before they happen. They also put FP&A in direct collaboration with the business as you evaluate your potential reactions. “(T)hese tools and techniques can help organizations consider a broad array of possible risks they might otherwise miss, then plan and exercise their responses.”
CFO: The CFO of 2030
A recent CFO panel discussed how the next decade will change their role. Key predictions included the need to better understand and utilize increasing mountains of data, becoming closer partners with the business, and embracing the changing workplace and worker. They also expect another black swan event to happen, but say CFOs who understood their data were able to better manage their pandemic response. “(D)ata-literate CFOs were the ones who were ready for this crisis. They will be the CFOs who can best navigate the next inevitable one.”
CFO Dive: ESG to transform CFO role
The coronavirus pandemic added to the momentum behind calls for corporate reform and action on environmental, social, and governance issues, or ESG. It’s pushing organizations to report on more than just financials, and the Big Four accounting firms recently agreed upon a set of standard ESG metrics. But it also puts more pressure on CFOs to start tracking and reporting on these metrics. “(The) CFOs’ role will be transformed as they become responsible for reporting on far more than just financials.”
Financial Management: Using financial forecasts to set compensation
Many compensation plans revolve around goals the pandemic may have rendered unreachable. FP&A can take the lead on realigning compensation metrics with achievable goals such as customer retention, cross selling, and relationship building with current, and even past, customers. FP&A can also help find less expensive incentives, such as increased PTO, promotions, and flexible work situations. But remember to keep employees informed of your plans. “The organizations that prioritize transparent communication are those that can most effectively retain key players during down times.”
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.