In every organization, FP&A leaders and CFOs are pressed to provide precise financial forecasts with actionable insights to support high-quality decision-making. But more often than not, they are confronted by challenges like limited resources and lack of time.
Moreover, dispersed organizational data and outdated reporting processes mean that FP&A teams cannot provide the clear insights that companies require to drive growth. Gartner’s research shows that merely 3% of businesses have fully aligned and integrated operational, strategic, and financial planning processes in place.
Experts say most FP&A teams still stick to spreadsheets for their data analysis and presentation requirements. A large number of enterprises have used spreadsheets for data modeling. Still, experts believe spreadsheets are hard to scale, inflexible, and error-prone for smaller data sets and simple data models. The good news is that finance functions do seem to prefer a centralized data repository as a single source of information — actual implementation of this practice, however, is the main challenge.
Imagine what would happen if a company is rapidly growing or has already grown to the enterprise level. Such businesses require FP&A processes that scale with them. This is where the fantastic features of FP&A software packages are imperative for a scaled organization’s financial planning and analysis requirements.
Challenges Facing FP&A Teams
Gartner’s study reports that only 13% of companies can identify performance-related issues before they start affecting financial performance. Moreover, over 80% of companies take too long to determine steps to correct these issues. These are just some of the issues plaguing the operational efficiency of FP&A teams; there are several other challenges that FP&A leaders face:
Inaccurate And Outdated Data
FP&A leaders require the latest data for accurate data analysis and modeling. But dispersed organizational data and inefficient cross-departmental communication limit updated data availability for FP&A teams. This happens because spreadsheets are updated, edited, and circulated over time, the presence of different versions, and unavoidable human errors affect the reliability of data. Without the required information, FP&A teams struggle to ensure real-time reporting, leading to issues like operational inefficiencies and delays in the preparation of accurate forecasts and budgets.
Lack of Integrations with Key Data Sources
Planning processes largely depend on access to timely and accurate data from different departments across the company. FP&A teams require this information to set financial targets, analyze periodical results, and prepare accurate budgets that align with the KPIs. Lack of integration with key data sources leads to disconnected processes and systems that pose a real challenge for FP&A leaders. This issue can further lead to delays in the collection, collation, and sharing of accurate data across departments.
Poor Alignment Between Cross-Functional Teams
Efficient cross-departmental collaboration is amongst the prerequisites for most financial processes and initiatives. For FP&A in particular, this cross-departmental collaboration is essential for making accurate forecasts for the entire organization that have better visibility. Collaborative forecasting in an organization also helps move away from creating budgets and financial forecasts in silos. But despite the obvious benefits, many businesses severely lack cross-functional collaboration between FP&A teams, finance departments, and management. As a result, FP&A teams cannot provide timely insights to management.
Time-Consuming Forecasting and Reporting
FP&A teams face another crucial challenge when they manually complete mundane tasks like data entry, account reconciliation, budgeting, and financial planning. A lot of time is spent on these tasks that add no real value to the decision-making process but consume a considerable amount of time for FP&A teams. FP&A teams are responsible for some of the most important tasks, including data modeling and analysis. If the team members end up spending most of their time sorting and organizing the data instead of analyzing it, then the company stands at the losing end.
Skills Gap in FP&A Teams
FP&A teams are responsible for setting the tone for different departments by providing key insights on revenue forecasting, sales planning, and budgeting. Moreover, FP&A teams also have the task of driving the entire organization towards achieving the desired results. But many FP&A teams face the issue of the skill gap in the personnel; whether the team members are not trained in using the latest tools or are lacking in business analysis, the efficiency of the FP&A department is severely affected due to this skill gap.
How FP&A software gives the financial planning process a much-needed makeover
While the challenges beckoning FP&A teams are ominous, they can be managed efficiently with FP&A software.
An FP&A platform compiles data in real-time and runs key analytical processes enabling FP&A leaders to budget and forecast their business strategies. Whether creating unbreakable formulas or flexible financial models, FP&A platforms allow decision-makers to make the most out of data analysis. Here are some interesting benefits that the best FP&A software can bestow upon the organization: -
Save Time on Data Preparation
FP&A software integrates with your existing systems to bring together inputs from all business apps that the enterprise is using. Moreover, the best FP&A software allows you to clean and enrich your data in minutes, allowing you to spend the bulk of the time on data analysis.
360° Business Overview
FP&A software lets teams connect business cases from different departments in real time. This enhances the efficiency of FP&A teams allowing for the creation of detailed reports, forecasts, and plans, offering a complete 360° overview of the company.
Run Multiple Scenarios
FP&A software enables you to assess the key drivers of the business and understand its impact. You can run extensive what-if scenarios within minutes to prepare incredible financial models. Moreover, FP&A software supports easily updating assumptions and comparison scenarios through incredible visualization tools.
FP&A software encourages cross-departmental collaboration amongst teams in different departments. You can change quota assumptions, share insights in updated data, and tag different teammates to begin live conversations.
With their built-in features, FP&A software enables hassle-free communication between team members. It eliminates the need for writing extensive emails every time explaining data updates. Personalized workflows in FP&A software make the process of tracking progress easier.
Covers All Use Cases
The best FP&A software takes care of all the team members' activities. This includes budget variance analysis, revenue planning, collaborative budget planning, rolling forecast, and several others.
Your search for comprehensive FP&A software ends with Pigment, one of the leading FP&A platforms in the market. With its powerful calculation engine, intuitive design, and flexible multidimensional data model, Pigment empowers the FP&A teams to complete data analysis and modeling within minutes to enable informed and timely decision-making processes.
Pigment enhances the productivity of key FP&A team members to drive the growth of the organization.
Ready to transform your financial planning and analysis? Book a demo with Pigment today.