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By Douglas Yeung, Senior Finance Director at Genesys
When an organisation decides to invest in an FP&A software, there are three things to look for which will help ensure that the software selected will benefit the organisation as a whole, not just the FP&A function.
One key benefit that an FP&A software can bring to the table is the integration of data from other sources. It should be used to assist in the modelling and projecting of financials. With this in mind, an FP&A software should be able to integrate with various data sources and be flexible by pulling in not only financial data, but other data that may help in the modelling and projecting of the financials.
The process of data validation which is going into a financial model usually starts with the importing process. For FP&A, this may include historical financials from the company’s own financial system, it may also include external data such as economic data, market data shared or subscribed from research firms or data the FP&A team gathers from other functions within the company.
Therefore, an FP&A software should allow FP&A professionals to access or upload the data directly. After that, it will be important to provide different ways to check and validate data and, in the future, AI or machine learning should be able to highlight and alert users on data issues (missing data, invalid data and even abnormal trends).
After FP&A professionals import and validate the data, the next and crucial step is to perform an actual analysis. There are a few ways where an FP&A software can help:
Finally, reporting and visualisation of the results. After the analysis is done, normally FP&A professionals spend a lot of time preparing the information in a more management friendly format (for example, charts and graphs, summary of certain key financials). By being able to have a strong suite of reporting and visualisation tools, FP&A software can save the finance team a lot of time which is usually used for preparing the basics. The team will be able to spend the time framing the discussion instead.
Ten years ago, it was difficult to imagine a tool that can do all the above well. But with companies using increasingly more data in their business, along with improvements in artificial intelligence and machine learning, it is exciting to see how companies that specialise in FP&A software can come up with the next generation of planning tools.
The article was first published in Unit 4 Prevero Blog
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