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Three proven steps for making financial planning a continuous process

Three proven steps for making financial planning a continuous process 3

Three proven steps for making financial planning a continuous process 4By Brian Montgomery, Senior Director, International Finance, Workday

Financial planning has never been more challenging. We operate in an environment where things are changing rapidly and businesses have to adapt quickly to respond to these sudden, often unexpected, shifts. Despite the intense need for dynamic planning, many businesses are held back by legacy technology, systems and processes. Year-long planning cycles can constrain the enterprise with assumptions and recommendations that are often outdated within a matter of weeks. Spreadsheets and manual data capture mean that insights into a problem are only possible once the next problem has arrived. This need not be the case.

Thanks to modern cloud-based planning technology, finance teams have data-driven tools at their disposal. These help unlock crucial insights, such as the key drivers that affect the performance of business teams and the market trends that will impact the bottom line. Businesses have more data at their fingertips than at any time in history, and now they also have the tools to make use of it.

However, technology is only part of the solution. To keep up with fast-paced times, a change of mindset is also needed. Financial planning can no longer be an annual, set-and-forget process. Finance teams need to embrace a proactive approach to planning, so decision-makers have up-to-date intelligence to continuously monitor issues and swiftly execute decisions.

Embracing continuous planning in three steps

At Workday, we’ve identified three practical steps finance teams can take to embed continuous planning in their finance function:

  1. Review your strategic vision

Strategic vision cannot be static, and the vision that drove you to success last year may no longer be relevant for the next year. It is important to continuously monitor your strategic vision and ensure its relevancy by evaluating whether it is still defining where you want to go and outlining the right roadmap to help you get there.

This continuously adaptive strategy needs to be underpinned by clear and consistent data from operational and financial systems. Manual systems can be error prone, with issues such as data duplication and inconsistent records. Using outdated or incorrect information when making these important decisions risks rendering this dynamic process useless.

Cloud-based, centralised data provides you and your team with a single source of truth, eliminates the risk of manual processes, and gives you the information you need when you need it – helping improve team effectiveness and efficiency.

  1. Plan in real-time

To ensure your planning is effective and relevant, it is important to use real-time data. Using months old data risks leaving decision makers in the dark when it comes to responding to immediate shifts in the business environment.

Modern cloud solutions help businesses feed their models with real-time, fresh data accompanied with advanced analytics tools. This enables finance teams to gain timely, actionable insight into what’s happening within the business.

Additionally, cloud solutions also enable self-service capabilities, so business partners can analyse their own data, freeing up time for finance teams to focus on creating forward-looking forecasts, rather than managing a stream of one-off requests.

  1. Plan for a variety of timeframes

Unlike rigid, annual forecasts, continuous forecasting enables leaders to understand how a change could impact performance over different timeframes.

Finance teams can look ahead and map how performance may shift in the light of different scenarios. This type of scenario analysis can help teams run forecasts that factor in a range of hypotheticals, which enable the business to better react should these hypotheticals become reality.

A rolling forecasting and budgeting process also makes it easier for a company to make more targeted and effective investments, as shorter cycle periods tend to be more accurate. Making it possible for teams to request resources more frequently makes it possible for the company to grow and change more organically. This has real business benefits, such as the potential to make the hiring process more streamlined and drive down staffing costs, by having real-time insight into business needs.

Data-powered planning

In these ever-changing and difficult times, finance teams are increasingly being relied upon to help businesses navigate through this uncertainty with accurate planning and forecasting – and it’s not easy. Using a flexible planning approach that can quickly adapt as the external environment shifts is a crucial tool for finance leaders to have in their back pockets. To help guide their companies through this challenging time, finance leaders need to take a real-time, data-driven approach to planning, powered by cloud-based data storage and analytics. It’s the best way to ensure businesses are armed with the most up-to-date intelligence while remaining agile enough to adapt continually.

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