Inflation, interest rates on the rise, and the specter of a recession hanging over us all. High turnover and workforce shortages. Supply chains that simply can’t catch a break. Even though some opportunities have arrived in 2023 like the rise of generative AI, this year has still been a challenging one for most companies.
As we look to 2024, many of us finance leaders and business leaders are experiencing a combination of hope that things will be better and dread that these challenges could continue. How can we use our FP&A (financial planning & analysis) tools and strategies to mitigate new challenges while capitalizing on any opportunities that may arise?
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If finance and business leaders have their people, technologies, and processes in a good position they will be able to react swiftly to the good and the bad whenever they arise.
The Right People
Without a solid personnel foundation, the next two areas won’t matter—the best technology in the world won’t get you far if there isn’t someone to utilize it and troubleshoot, and processes are nothing without the right people to execute them.
If your current staff doesn’t have the right skills to reach your business goals, determine whether training can bridge that divide or if hiring is your solution. Teams both large and small have their own strengths and weaknesses; ascertaining what those are with a team review is a necessary first step to finance success in 2024.
Foundational Technology
Oftentimes, small and midsize businesses (SMBs) use Excel and Google Sheets because they aren’t aware that there are solutions that fit the mid-market space. Excel inhibits the ability to be agile, makes it harder to do things faster, and is error-prone. FP&A tools, on the other hand, have removed barriers for SMBs, making it easier for them to plan at the speed of business.
Though the technology we rely on to budget and forecast is advancing all the time, that doesn’t mean each new product is necessarily a fit for your department. Especially given how complex the software landscape has become, more care should be taken in building or choosing a platform to work from.
It’s better to assess any new technology by the following criteria: does it fit into one of the key pillars of FP&A technology?
Those pillars are what all finance departments are built on, and include data management, reporting and dashboards for visibility, financial modeling and budgeting, and workflow tools to better enhance collaboration. AI and machine learning are quickly becoming an essential pillars in their own right.
If a new technology would improve any of these foundational pillars of your finance department, it’s worth a close look. If it’s not making a meaningful addition to your technology suite, it’s likely more of a distraction and can be avoided.
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Perfect Processes
Now that you have the right people and the right tools, it’s time to put the machinery in motion. Evaluate the way your people work.
Are they properly utilizing the technology you have put in place?
If not, something is amiss and you either need to replace the tools or do some training so that your team knows how and why to use them.
In almost every department there are processes that could be improved.
Finance leaders should focus on building efficiency, removing redundancies, and building a comprehensive strategy. Innovation is necessary, but people can naturally be resistant to change, especially when the goal isn’t clear from the outset. Be sure to recognize good work, reward innovative thinking, and use KPIs (key performance indicators) to allow process improvements to take hold in your department.
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