In this article, the author shares the essentials of compelling data storytelling and provides several tips...
Most would agree that the world is very different in the post-COVID era. While global economic uncertainty continues, growth is still slow in many countries, inflationary conditions still exist, climate worry intensifies, renewing focus on sustainability, and optimism for a brighter future is probably on the rise.
The ways of working are changing daily, led by a purpose-driven workforce and aided by the invention of new technology/tools/apps. Simply put, the change we witness is even more rapid than in the past.
How Can Your FP&A Team Elevate Your Business in 2024?
The Financial Planning and Analysis (FP&A) team sits in the ‘middle of everything’ and probably has the best view of the business trends/performances. Hence, with all the insights, FP&A can truly help the business to move to the next level.
In my view, 2024 should be a year of the ‘step change’ for our function, so we should become ‘the true strategic partner’ to the business and top management through deeper collaboration and helping to achieve the strategic ambition by driving business performance.
The points shared below are based on my learnings and discussions with other leaders and do not represent the opinions of my past/current employers. These are generic observations, and the situation for each organisation/individual is certainly different, so you will have to evaluate these recommendations carefully before adopting them.
I am trying to capture a few areas that might need a renewed focus from FP&A professionals in 2024.
Drive business transformation through data-led stories
As we discussed above, the economic conditions are still challenging in many parts of the world, the inflation continues, and the growth is slow. Competition is also fierce. To stay ahead of the curve and to deliver shareholder returns, every business is looking for agile decision-making regardless of the perspective of return on investment or cash flow. They look at running the business with real-time insights. On-time decision-making is key to success, and the speed of decision-making is paramount.
In today’s world, information is widely available. But the story behind that information is exactly what the businesses need. It is the time for FP&A to help companies transform through data-led stories.
Help to free up the cash flow
Borrowing interest levels will likely remain soaring even in 2024, so costs related to it will still be high.
The finance function can renew its focus on reducing the cost of an organisational debt by freeing up the cash flow. FP&A has all the visibility and insights of the business. However, many enterprises still focus a bit more on P&L than the balance sheet. It may be a lost opportunity.
That said, FP&A can help lead the Change Management process to guide the organisation to focus equally on the balance sheet along with P&L. Moreover, the FP&A team can aid the businesses with the insights to help the leaders focus on working capital and evaluate every investment need.
Steps towards advanced analytics and automation
In the last few years, technologies truly have moved to a different level. However, many companies are far away from adapting to them. Many hours are still spent on such activities as budgeting, forecasting and manual analysis. It means that many FTEs are spent on non-productive work. I suppose the organisations are missing the technology edge. So, 2024 can be the year when FP&A should seriously consider embracing technology to free up many business hours, which can be used in areas where they would get the best return.
Help organisations revisit existing KPIs and move towards productivity-based KPIs
Even today, many companies continue to use Key Performance Indicators (KPIs) from the past. KPIs need to be dynamic and relevant to the current business and economic conditions. With all the changes that we have faced during the last few years, most organisations may need to revisit their KPIs so that these metrics can help enterprises navigate the current realities, challenges and opportunities. In my view, 2024 should be the year when FP&A can truly establish the relevant KPIs based on insights that will drive the right behaviour and reflect the business needs.
It is time to drive a step change in how we work, especially in thinking about how we can drive the FP&A function. The business needs our help, so why not wear an evolved hat this year and be the real partner our companies are looking for? We can contribute to profitability and cash flow and truly enhance shareholders' expectations.