The strength of those working in FP&A often comes when they worked in different industries or with BU’s from different countries. They learned a little bit more about the impact management can have on the numbers under different circumstances. To develop a long-range forecast, financials need to look beyond current events and steer away from business plans based on extrapolation.

A question frequently asked by businesses of all sizes is what should my Key-Performance-Indicators (KPIs) be and how many should I have? They often look to other companies in their industry including suppliers and customers to see what they may use to run their business. Frequently, they are fraught with frustration by the lack of data in the public domain.
 

The course of managerial accounting dedicates up to two chapters on the subject of budgeting. Going into these types of budgets may be helpful for students but I don’t want this article to be a repeat of what appears in textbooks.  I want this article to focus on the process of financial planning and how it can be used in your company’s selling function.

FP&A professionals work in an environment that requires communicating with a wide variety of people. This requires us to be adaptable to communicate effectively with all these different audiences. There are some things we can do to ensure we are consistently and reliably on point by tailoring our communication to each audience.

In short, the finance business partner is an experienced, well-rounded, and dynamic professional who can step into any organization and quite quickly deliver long-term value.It is important that we identify and apply the term Finance Business Partner in the hiring process to clearly communicate and align our business needs and expectations of the candidates.

At the fifth AI/ML FP&A Committee meeting, Igor Panivko, FD & MD at Konica Minolta, talked about dynamic and interactive Sales Planning based on the algorithmic model. He shared his experience in harnessing data in FP&A and how the company tried to solve some of the challenges which are typical for the finance function. 

Traditional budgeting process normally starts with forecasting sales levels, cost of goods sold then all operation expenses until reaching to the proforma income statement without understanding how changes in costs (both variable and fixed) & sales will affect profits in future periods. But modern FP&A professionals started to implement CVP analysis during the annual profit plan to study the interaction of sales with variable & fixed costs on the profits received.

Sometimes, what you forecast needs to change dramatically, due to e.g. market disruption or internal changes. You also might not monitor every business the same way, because each might be in different development stage or ´situation´. By looking at the company itself, but also possible (management) crises, you can determine what the focus of the forecast should be. 

It’s early days for the UK’s new leadership team, and whilst Boris Johnson is not everyone’s cup of tea, there is a new momentum and style coming from Downing Street. This will have implications on further turbulence in Westminster over the coming weeks as we count down towards the latest Brexit deadline of 31st October 2019. What can be said is that the Cabinet is united for the first time since the Referendum, and that there is a revived sense of purpose and activity.

Welcome to the fourth issue of the monthly FP&A Trends Digest! This time we will share some essential tips on strategic finance, the purpose of planning, the driver-based analysis approach and the power of scenario planning.