FP&A involves planning, forecasting, budgeting, and analytical processes that help leadership make significant business decisions that directly affect the company's financial health.
The role of FP&A teams has evolved over the years as workforces and processes become decentralized. In such a scenario, time has become an extremely valuable resource for businesses operating in competitive environments.
This is where FP&A automation emerges to help businesses leverage speedy decision-making.
Is automation the future of FP&A?
Financial automation is undoubtedly an emerging trend in the FP&A operation that is quickly becoming the norm.
FP&A involves several manual processes that can be automated to enhance the efficiency of workflows. These tasks include data collection, data sanitation, data consolidation, report preparation, and more.
Automation can help process more data at an advanced level for detailed analytics on areas such as expansion opportunities and pricing strategies.
Additionally, business partnership is increasingly expected from the FP&A function as a whole. FP&A business partners deliver deep financial insights and analyses to cross-functional departments, thereby facilitating informed decision-making.
Experts predict that extreme automation will evolve the scope and types of services offered by FP&A teams, eventually leading to changes in the service delivery model.
Soon, FP&A teams will use advanced analytical tools made available through cloud-based platforms to integrate financial forecasting with sales, supply chain, marketing, operations, and other activities in the company.
Why manual efforts are detrimental to the company's growth
Companies in present times need to be extremely agile and responsive to the changes in the market to stay ahead of the competition.
This is where automation through superior platforms has a clear edge over manual tasks and inefficient tools. There are several ways in which traditionally manual tasks are detrimental to the company's growth:
- Time-consuming: Manual data prep takes up almost 80% of the average analyst’s already meager time. This time could otherwise have been spent on drawing insights from the data.
- Manual errors: When it comes to data collection and analysis in FP&A, manual tasks are prone to human errors. This could result in incorrect data being presented to leadership, leading to misfiring decisions.
- Slower and inefficient: While tools like Pigment allow you to create multiple models in just a few hours, traditional manual tasking can take a few days, if not weeks. This results in a slower and inefficient decision-making process.
- Tedious: Manual tasking requires you to create data models from scratch every quarter. Moreover, there is an evident delay in sharing data across existing applications in real time.
- Juggling multiple spreadsheets: Modeling on the back of manual processes would require financial analysts to sift through multiple spreadsheets and realms of emails to manually connect data.
The end result of employing manual processes affects the company's growth potential in the long run. This is why businesses need to automate certain processes to boost business growth and expansion. This includes:
- Data import, extraction, and consolidation
- Data preparation, cleaning, and validation
- Access rights and security
- Workflow automation for budget and forecast approval
- Data analysis and presentation
Data Imports, Extraction, And Consolidation
Automation is the way forward for data imports, extraction, and consolidation. Automation helps companies collect accurate data in real time from multiple sources.
This creates a single source of truth that acts as a central point for multiple departments.
Moreover, automation through platforms like Pigment will free FP&A teams from time consuming data consolidation and data transfer errors through seamless integration with systems such as:
- ERP and Accounting Systems: Integration with ERPs and Accounting systems reduces silos between departments and allows for informed decision making.
- HRIS and ATS: This enables unified data sources for accurate headcount calculation to precisely measure the impact of every new hire in the company.
- Data Lake: This creates access to enormous quantities of data, ensuring FP&A models have incorporated all the data points required for accurate decision-making.
- CRM: RevOps and FP&A teams get access to consistent business metrics stored in the CRM to power efficient planning and forecasting methods for meaningful insights.
- Billing and Payment Systems: Integrating with billing and payment systems enables the FP&A team to get a comprehensive view of the cash flow, in and out, of the business to ensure efficiency in the liquidity planning process.
- Spreadsheets: The option always remains to attach your financial planning tool to smaller, simple data sets located within spreadsheets.
Data Preparation, Cleaning, And Validation
FP&A automation certainly helps with data collection and consolidation, but it also makes the process of data preparation, cleaning, and validation more efficient.
Automating this process through a financial planning platform like Pigment reduces errors through in-built data processing capabilities required for data sanitizing in the following ways:
- Time saving: FP&A teams can spend up to 80% of their time in data analysis and only 20% in data preparation, whereas Pigment enables data cleaning and validation in a few minutes.
- Quicker Modeling: FP&A teams can get models and what-if scenarios up and running in a few hours with Pigment’s intuitive UI and easy-to-understand syntax.
- Real-time Data: Rather than recreating models from scratch every quarter, FP&A teams can share updated data in real time across applications.
- Lower Error Rate: When FP&A teams are rid of manually processing data via spreadsheets, chances of errors are reduced dramatically.
Access Rights and Security
When an organization is in the growth stage, it is important to manage access rights and security efficiently.
Any errors or delays here can lead to considerable issues in the long run, affecting the integrity of data and compromising the security of the company. This is where automation becomes critical for FP&A teams.
Access rights have a direct impact on the way a user interacts with data. It helps ensure data integrity as only specific, predetermined specific individuals will have the ability to access and/or make changes to the data.
Access rights are nearly impossible to manage without a planning platform like Pigment.
FP&A teams can manage access rights to the data more efficiently by applying roles to different users.
Strong data security to run without too much manual intervention can be a time saver in these areas:
- Managing Access Rights: FP&A teams can manage access rights by assigning permissions to standard or customized roles. This ensures that only specific users have access to granular levels of data.
- Single Sign-on: FP&A teams enjoy the benefits of single sign-on and controls in place for identity management.
- Audit Trail: Enhance trust in models and manage changes efficiently with the audit trail feature to track model or input changes.
Workflow automation for budget and forecast approval
FP&A teams can leverage workflow automation for leadership to enjoy a streamlined decision-making process for budget and forecast approval.
inefficiencies in a company's workflows present a serious risk. This type of process inefficiency can overburden FP&A teams with operational inefficiencies.
Traditional processes involving spreadsheets and emails for budget and forecast approval are inefficient as they lead to delays, lack of transparency, and improper approvals. Through workflow automation, FP&A teams can enjoy benefits such as:
- Prevent revenue loss: FP&A teams can prevent revenue loss caused due to inefficient, traditional processes used for budget and forecast approval.
- Reduced workload: FP&A professionals create better process visibility by eliminating unproductive back-office tasks, ensuring better decision-making processes.
- Transparency: Teams can ensure better collaboration within departments through better transparency at all levels for an efficient budget and forecast approval process.
Data Analysis And Presentation
FP&A teams are often under pressure to prepare accurate financial models and present analyses to executive decision-makers.
When the data flows in regularly from multiple sources, manual data analysis will not cut it.
Manually copy-pasting the data into slides and spreadsheets is equally tiresome. This is where automation in data analysis and presentation can considerably enhance the efficiency of FP&A teams.
For example, FP&A teams can prepare impressive presentations to share insights with leadership with Pigment’s Google Sheets connector that updates sheets or slides with a single click.
FP&A teams collect, arrange, and analyze data from cross-functional departments to create data-backed reports that address issues affecting the company's financial health. Through automation, their efficiency can be enhanced manifold, thereby helping with the company's growth in the long run.