Financial Planning and Analysis (FP&A) team challenges are a critical issue facing modern enterprises. As FP&A teams grow increasingly forward-looking and strategic, it is essential to provide them with the right data, processes, and tooling to support their efforts.
However, in today's rapidly changing business landscape, FP&A teams face various challenges that hinder their effectiveness. According to a 2019 survey by Deloitte, 78% of finance leaders believe the pace of change in the business environment is accelerating, making it difficult for FP&A teams to keep up.
In this article, we will discuss the top 5 challenges facing modern FP&A teams and how CFOs can address them to improve the effectiveness of their finance function.
Access to real-time, accurate, and connected data
One of the most significant challenges facing FP&A teams today is the ability to access real-time, accurate, and connected data. Without access to this critical data, finance teams can struggle to make informed decisions, leading to inefficiencies and missed opportunities.
A study by EY found that 71% of finance leaders believe they lack the resources necessary to meet their strategic objectives. This includes not only budget constraints but also shortages in personnel and technology.
To address this issue, FP&A teams can use integrations and data connectors to ensure their datasets are always in sync. This technology can connect different data sources and automatically update information in real-time, reducing the risk of errors and improving the accuracy of financial reports.
Implementing continuous planning, a method that enables FP&A teams to plan, forecast, and analyze their data in real-time, can also help address this challenge. Continuous planning allows finance teams to adapt quickly to changes in the market and to identify trends and opportunities as they emerge.
To address these challenges, companies can invest in tools and technologies that automate manual processes, such as data entry and report generation. By freeing up time for finance teams, these tools can help ensure that valuable resources are dedicated to strategic planning and analysis, rather than administrative tasks.
Communicating insights and influencing strategic/executive decisions
The FP&A team isn't just crunching numbers and churning out reports - they're the strategic masterminds behind the company's success. By effectively communicating insights and exerting influence over key decisions, they help steer the ship towards prosperity. With the current atmosphere of uncertainty, it is more important than ever for finance professionals to provide executives with the insights they need to make informed decisions. However, this is easier said than done.
To effectively communicate insights, FP&A teams must be able to tell a story with the right data and presentations. A 2021 report by Deloitte found that while 56% of finance leaders believe that their teams have the necessary data and tools to deliver value-added insights, only 40% believe their teams are effective at communicating those insights.
Effective data visualization can make it easier for stakeholders to understand complex financial data and can help FP&A teams to communicate insights more effectively. A very simple way to do this is to create a presentation.
Forming meaningful business partnerships
Let's face it, in today's world, FP&A teams simply can't go it alone if they want to be successful. Building meaningful business partnerships is absolutely essential! By partnering with leaders from sales, HR, marketing, and even their own accounting teams, FP&A can drive accurate budgets and forecasts that support the company's overall goals.
Collaboration with sales leaders can help FP&A teams better understand the business pipeline and forecast revenue more accurately. This is especially important in times of uncertainty, as a robust sales forecast can be the difference between survival and failure.
Partnering with HR can help FP&A teams to identify and track the right metrics, such as employee turnover rates and headcount, which can have a significant impact on the bottom line. By incorporating these data points into their forecasting models, FP&A teams can provide more accurate financial projections.
Similarly, collaboration with marketing can help FP&A teams to gain a better understanding of how marketing initiatives are impacting the business. By tracking metrics such as customer acquisition costs and conversion rates, FP&A teams can make more informed decisions about where to allocate resources.
FP&A teams also need to form partnerships with their accounting teams to ensure accurate financial statements and forecasts. Bridging the gap between FP&A and accounting teams can be a challenge, but it is essential to ensure that both teams are working towards the same goals.
These partnerships require effective communication and collaboration, and FP&A teams need to be able to present data in a clear and compelling way to gain the support of their colleagues. Effective data visualization and storytelling can help FP&A teams to communicate complex financial information in a way that is easily understood.
Automating manual, low-impact tasks
One of the most significant challenges facing FP&A teams is the time and effort required to complete manual, low-impact tasks. These tasks often take up valuable time that could be better spent on more strategic activities, such as analyzing data, creating forecasts, and providing value-added insights to business leaders.
Fortunately, advances in automation technology and now artificial intelligence have made it possible for FP&A teams to automate many of these manual tasks, freeing up time and resources to focus on more high-value activities. By automating tasks such as data entry, report generation, and variance analysis, FP&A teams can reduce the time and effort required to complete these tasks and focus on more strategic activities that drive value for the business.
Not only does automation help to reduce the burden of manual tasks, but it also helps to improve accuracy and consistency. Manual tasks are prone to errors, and the more tasks that FP&A teams can automate, the less room there is for human error. Additionally, automation helps to ensure that tasks are completed consistently and according to established processes, reducing the risk of inconsistencies and errors in reporting.
By adopting an automation-first mindset, FP&A teams can transform the way they work, becoming more efficient and effective in their roles. Automation technology can be used to streamline workflows, reduce errors, and improve the quality of data analysis and insights. With the right tools and technology in place, FP&A teams can spend less time on manual tasks and more time on high-value activities that help to drive business success.
Nurturing and retaining top FP&A talent
Attracting and retaining top talent is crucial to the success of any organization, and FP&A teams are no exception. As businesses become more complex, the role of FP&A professionals becomes more critical, and the demand for top talent continues to grow.
According to a recent study we conducted with BalanceSheet, CFOs are optimistic about hiring in 2023, with only 21% expecting it to be more challenging than before. To attract and retain top talent, many companies are offering high salaries and great perks. In fact, the study found that 61% of CFOs are considering these strategies.
However, attracting talent is only one piece of the puzzle. Retaining top talent is equally important. The cost of replacing an employee can be high, and losing a talented FP&A professional can have a significant impact on a company's performance.
So, how can organizations retain their top FP&A talent? One way is to provide opportunities for growth and development. FP&A professionals who feel that they are continuously learning and advancing their skills are more likely to stay with a company long-term.
Another critical factor is workplace culture. High-efficiency FP&A teams require a supportive environment that fosters open communication, collaboration, and innovation. Companies that prioritize mental health and work-life balance are more likely to attract and retain top talent.
As we wrap up, it's clear that modern FP&A teams face many challenges, but there are actionable steps CFOs and finance leaders can take to address them.
- First and foremost, access to real-time, accurate, and connected data is essential for effective financial planning and analysis. Integrations and data connectors can help FP&A teams ensure their datasets are always in sync, and embracing continuous planning can help teams stay ahead of the curve.
- Effective communication is also crucial, especially in uncertain times. FP&A teams must be able to tell a story with the right data and presentations and use effective data visualization to make it easier for stakeholders to understand complex financial data.
- Forming meaningful business partnerships is another critical component of FP&A success. Collaborating with leaders from Sales, HR, Marketing, and other departments can drive accurate budgets and forecasts, and bridging the gap between FP&A and accounting teams can help streamline financial processes.
- Automating manual, low-impact tasks is another key to FP&A success, allowing teams to focus on higher-value activities and strategic planning.
- Finally, nurturing and retaining top FP&A talent is essential for long-term success. Offering high salaries and great perks can help CFOs and finance leaders hire and retain top talent while prioritizing mental health can prevent burnout and maintain a high level of efficiency.
It is clear that FP&A teams must be adaptable and innovative in order to succeed in today's business landscape. By embracing technology, focusing on collaboration and communication, and investing in talent retention, FP&A teams can continue to drive value for their organizations and help them achieve their strategic objectives.