Maintaining a forward-thinking mindset in business is crucial to success the same way it is in life. I always think about what is coming next. Are we prepared to face the challenges ahead? Do we need to take specific actions or anything special to make sure we don't see any troubles in the future? Even if we may not have the answers, we can certainly try to be prepared for a better future for us in our personal and professional environment.

The same happens when we think about our company or enterprise. Entrepreneurs and business leaders can get so caught up in daily operations that they lose sight of the need to plan ahead. It can be a costly mistake. To ensure long-term sustainability and growth, it's essential to look ahead in your financial planning, forecasting, and budget management.

I remember my time at Pfizer when the budget season was an unthinkable task for our FP&A team, who saw it as a waste of time and another boring administrative process. They didn't realise its impact on the long-term business strategy and executive management decision-making process. At that time, people were not at all interested in providing accurate numbers, as they would just do simple straight-line math and split previous and current year numbers to fill out the line and check the mark. When executive management started to ask questions and put pressure on targets and deliverables, people struggled to understand what was going on within their space. Moreover, their inaccurate decisions began to stress the whole team, disrupt operations, and threaten business continuity. Once they understood the importance and relevance of the process, they started streamlining their financial deliverables, benefiting from data analytics, and supporting an adequate financial planning process.

It is a reminder for us that financial planning is the backbone of every decision made within a company, either a start-up or an established business. Contingency planning is not only the finance team's responsibility; it should be shared responsibility across the entire team. By understanding the key financial dynamics and staying on top of financial health, you can steer the business in the right direction, make informed decisions, and prepare for unexpected challenges.
 

Overcoming Budgeting Complexities with Technology and the Power of Collaboration

During the budgeting process, we face many challenges, such as time pressure, lack of flexibility and changes in an external business environment. It involves a lot of work on data gathering and sometimes leaves little room to make timely adjustments or provide strategic input, limiting our agility and flexibility. The budgeting process requires a resource-intensive collaboration with multiple departments and stakeholders and back-and-forth communication, which may lead to misalignment. People used to work in silos, relying on data from various departments and having access to incomplete information. It could lead to budget inaccuracies and costly human errors.

Technology can help us relieve some of these challenges and facilitate our interaction between functions and data gathering. Advanced FP&A tools can allow FP&A teams to:

• update plans in real-time,
• prepare different scenarios,
• adjust budget and forecasts in response to new data and market shifts,
• consolidate data from different departments/areas by eliminating silos and
• ensure alignment of strategic goals into a single platform to work with the same information.

Technology also provides collaborative tools and reporting capabilities to enhance cross-department communication, allowing stakeholders to input and review the same data, streamlining approvals and boosting the speed and accuracy of budget preparation. Finally, new technology can help us bridge gaps in the budgeting and forecasting process by providing tools for strategic modelling and goal alignment, helping FP&A leaders incorporate strategic targets into their budget process and focus on the long-term and forward-thinking mindset.

In summary, we can leverage technology for automation, agility, data centralisation, running real-time scenarios, error reduction, and anticipating the future.

Four Tips for Enhancing Budgeting and Forecasting Process

FP&A leaders can shift from financial managers to strategic Business Partners by addressing traditional budgeting and forecasting challenges, encouraging a forward-thinking mindset, and taking proactive steps to help their organisations stay ahead. People will also need to understand what the business is going through, as actions will need to be customised and adjusted accordingly. Some of the recommendations to consider before the next budgeting season are:

 1. Establish a foundation of how to prepare a forecast and budget

This process needs to be established with clear guidance on targets and expectations, concisely capturing every part of the organisation. The process should consider setting clear goals and objectives and establishing a roadmap on the direction and true north that the company wants to have. It should also account for any unexpected changes, identify risks and opportunities to incorporate them into the estimates, and potentially prepare different scenarios. You will also need to understand cash flow impacts and regularly track inflows and outflows to ensure that operational costs are covered. A detailed financial forecast will give you clarity on your business's direction, while a solid budget can help you ensure efficient allocation of resources.

2. Implement regular check-ups

Regular check-ups and tracking of each plan are essential. While your budget is typically set annually, it should be revisited and adjusted within the forecast process, which can be conducted 3-4 times per year or even monthly. Make sure you build the foundation for growth and expansion, and ensure the budget accounts for scalable growth and continuous productivity improvements. Keep investments included in the projections to have a full picture of every cost involved in your operations.

3. Establish a fine-tuning process to model sustainable profitability and increase operational efficiency

Taking actions to increase profitability margins should always include long-term planning, as having potential scenarios and expectations for longer periods can provide a better view of the connections with business strategy.

4. Consider risks and opportunities

Considering risks and opportunities is essential to prepare for market or conditions downturns or unforeseen risks. Management should be aware of all potential items impacting or benefiting their operations. Every budget and forecast process should include a review of risks and opportunities, assessing the probability of happening and possible impacts.

Implementing our planning tool required a lot of commitment and developing the right process and dynamics. The process was well-established, but should have been improved to facilitate better interaction and the team's performance. We established shorter review periods, setting a clear goal not only for the year-end views but also for the quarterly adjustments to report to the board of directors and the Securities and Exchange Commission (SEC). It helped us to establish a true north expectation for the whole year and allowed the team to prioritise the things relevant to deliver a good performance, promote and keep an eye on key projects and avoid wasting time on minor details and eliminating inefficiencies. Moreover, we focused on understanding the potential risks and opportunities to build different scenarios, which may impact results, operations and the team's performance. By ensuring and implementing process enhancements, you also contribute to improving people's sentiments and partnerships, as they will be part of a rounded and broader business outlook. Сreating a culture of ownership in a collaborative environment is also crucial, as it helps us build high-performing teams.

It is key to always stay on top of the budgeting and forecasting process. This is not a one-time exercise. Successful businesses review their financials regularly: monthly, quarterly, and annually. These updates allow us to adjust plans according to current realities. Conduct regular Business Intelligence reviews and leverage financial software to integrate your data analysis and reporting tools to help management with insightful information for decision-making.
 

FP&A leaders can strengthen their roles and Business Partnering by enhancing decision-making with strategic insights and providing actionable input to guide business leaders to make informed and proactive decisions. They should also facilitate cross-functional collaboration, reinforcing communication and transparency between all branches to understand the financial impact of decisions, promoting a unified approach to growth. Moving beyond incremental budgeting, FP&A leaders can emphasise the importance of strategic financial planning, helping their organisations align budget allocations with long-term goals, such as market expansion, product innovation or operational efficiency. In this way, FP&A leaders will play a pivotal role in shaping the company's vision and growth trajectory.

Conclusion

A forward-thinking mindset and embracing technology are essential for every stage of running a business. Financial forecasting and budgeting are critical tools that enable FP&A leaders to plan for growth, handle uncertainty, and stay competitive while becoming invaluable Business Partners. By continually assessing the financial health and adjusting strategies, FP&A leaders can make informed decisions and steer the business toward sustained success. The future of any business depends on the ability to see beyond today's challenges and opportunities, so prioritise financial planning from day one.