You may also be interested in:

Articles

COVID-19 Survey: How FP&A Will Change

  • By Bryan Lapidus, FP&A
  • Published: 5/28/2020

forecast

This final article in the FP&A COVID-19 Survey series takes a look ahead and asks the FP&A community, “Once this crisis ends, what do you believe FP&A will be doing differently?” We reviewed 250 written comments and have summarized recurring themes below.

The comments are lightly edited for brevity and clarity, and are not rank-ordered. Feel free to use elements from this list as a blueprint for your own FP&A improvement plan.

“The team will be working remotely more often.”

  • We will likely increase our remote work schedules as a benefit to employees and to the company as a whole.
  • We will be more virtual than before. This will also allow a better ability to source talent.

More visibility with senior management

  • I believe FP&A will be brought into more levels of the organization to assist with reviewing and understanding our options and modeling of scenario/sensitivity impacts more frequently.
  • More involved in all strategic planning - operational and financial.
  • I think that we will be seen as more credible and relevant for driving strategic discussions.
  • FP&A will be looked at more as a business partner rather than an in-house support department.
  • FP&A will be highly involved in hypothetical scenario planning with increased senior leadership collaboration.

“Incorporate scenario modeling into the budgeting [and forecasting] process”

  • Creating probabilistic models with wider range of scenarios, including potential black swans.
  • Operate with multiple scenarios planned at all times, look at a broader spectrum of scenarios, and be more aware of external variable impacts.
  • More robust scenario planning and identification of trigger points which indicate the transition from one scenario and into another.
  • We will be implementing three models, one for 3% to 5% upwards swing and one for 8% to 10% downwards swing with increments of 8% at each turn to be able to see how it will impact the business.

“Risks aspects to be integrated in the plan”

  • More regular 'stress testing' of our business strategy and balance sheet, including detailed action plans to quickly respond to sudden unpredictable events.
  • We will be having conversations about resilience vs. the maximization of profit for shareholders.
  • Re-prioritizing usage of third-party vendors, having better understanding of emergency scenarios and mitigation planning.
  • This crisis has taught us to be more realistic in our forecasting… [bad news and] hard facts do not get adequate "air time."

“More detailed cash planning”

  • Maintain cash flow reserves efficiently to minimize unanticipated situations.
  • More focus on working capital management, particularly inventory and A/R.
  • Adding a 13-week cash forecast to our regular reporting. Shifting focus to liquidity.

“Investing in the right systems”

  • This crisis will give us the impetus/business case to move forward with predictive analytics.
  • FP&A will have “won” the right to obtain proper information/accounting/reporting tools/systems to support its mission of anticipation, co-piloting and giving clarity in times of confusion.
  • Move over to self-serve reporting tools for senior management.
  • Better use and understanding of planning systems, analytical tools. Organization must provide support to improve their acumen development.
  • Focus on smart automation to alleviate the team from manual activities while focusing on business partnering with stakeholders to support them in their strategies.

Process improvement

  • More frequent forecasting, which will require better (easier to use) systems.
  • Creating rolling forecasts rather than relying on just annual budgets and monthly forecasts.
  • We will be adding a description in our budget that identifies whether planned purchases/services are "mandatory", "strategic", or "discretionary". This will help FP&A more quickly determine what items are candidates for delaying and/or reducing.
  • We would focus on the results rather than unnecessary steps of lengthy procedures and non-impactful reports and meetings.
  • Reduce unnecessary processes and look for efficient, clean operating routines.

While the above statements reflect the majority of responses, it is important to provide the minority report:

“Nothing will change.”

  • Pretty much the same. This situation is unprecedented that companies could not do much, but to hunker down!
  • FP&A will return to standard operations that existed pre-crisis with a few process improvements.
  • Not sure yet as this was so sudden and unexpected. A lot will depend on the outcome of this crisis.

To access other articles and information relating the survey, please visit www.afponline.org/covid19FPA.

Register for the webinar: “What COVID-19 Means for FP&A” on June 11th.

CFO Playbook by SERRALA:

Strengthen Your Finance Departments’ Offense and Learn About Best-In-Class Cash Visibility and Finance Process Efficiency Now

Click To Find Out How the CFO Playbook Can Help You

Copyright © 2020 Association for Financial Professionals, Inc.
All rights reserved.