Most CFOs are dissatisfied with the current Financial Planning and Analysis process, feeling it provides too little value and consumes too many resources.

As a result, people frequently inquire, “What are the Best Practices in Financial Planning and Analysis?” To yet, the answers have been based on common wisdom, anecdotes, and popular trends promoted by finance periodicals.

Hard data has been lacking… until now. 

The Institute of Management Accountants (IMA) created a survey in which over 700 businesses from across the world took part.

The technique used in this survey was what set it apart.

 Previous study concentrated on a certain approach before working backward to uncover success stories.

Instead, the IMA poll focused on what the most successful firms do differently than everyone else when it comes to Financial planning and analysis (FP&A).

These successful firms accomplish or surpass their objectives on a constant basis, and they consistently meet or outperform their rivals. 

It’s difficult to conceive of a single CEO who wouldn’t want such results (which, by the way, guarantee their bonus). 

These most successful firms tell us that their Financial Planning & Analysis process consists of the following steps: 

• Contributes to Shareholder Value (or business value if privately held) 
• The strategy’s execution is driven by this person. 
• Provides procedures to guarantee that the organization’s financial and operational goals are met. 
• Increases organizational understanding of the strategy and the responsibility of each department in attaining it. 
• Ensures that resources are allocated optimally. 
• Coordination of activities, projects, and programmes is ensured. 

Again, what CFO, let alone CEO, wouldn’t want that? The question is, however, how these best-managed firms achieved these achievements. What’s in their tap water? 

These are the questions that the IMA poll set out to answer, and the results are fascinating.

They are the focus of this blog series titled “12 Principles of best practices financial planning and analysis,” and they are as follows: 

1. Transform Strategy into Executable Plans 
2. Identify and Secure Budget Approval for Necessary Resources 
3.  Integrate Operations and Finance 
4. Investigate the Variance and Discover the Story Behind the Numbers 
5. Take Action When You Fall Behind on Financial or Operational Objectives 
6. Break down both financial and operational goals into smaller, more specific targets. 
7. Hold employees accountable for better financial outcomes and tie them to financial incentives. 
8. Align Financial Incentives with Operational Objectives 
9. Determine what factors contribute to your company’s performance and devise strategies to account for those factors. 
10. Set short and long-term goals for company drivers. 
11. Create initiatives and programmes to meet corporate objectives. 
12. Track business outcomes and link them to incentives. 

If you don’t have time to read the entire series right now, here’s a high-level overview of the results: 

In order to drive business results rather than simply anticipate them, the best-run businesses utilize Financial planning and analysis (FP&A).

There’s a lot there to unpack.

The best-run businesses understand how operational changes can produce financial success, and they devote as much (if not more) attention to operational planning as they do to financial planning because it helps them achieve their goals more effectively.

In the best-managed businesses, people are held accountable for producing particular operational and financial results, moreover, they understand the resources required to achieve those goals, and after presenting their case, those resources are baked into the budget and clearly recognised.

Is there anything else to it?

Yes, there is a lot more, but those foundations, like a compass, lead to true north. 

What steps should I take to do good financial planning and analysis? 

So, what’s the first step in your journey toward best-practice of Financial planning and analysis (FP&A)? We recommend that you start by establishing a baseline by comparing your firm or institution to the 700-plus entities in the database.

You will be able to discover critical gaps in your company’s procedures, which is the first step in closing them.

Then examine the IMA Management Accounting Competency Framework, paying special attention to the parts on Planning and Reporting and Decision Making.

Finally, undertake an IT evaluation to see how well your systems serve as a decision-making platform rather than a collection of tools. 

Diamond Professional Consultants specializes in Business Intelligence softwares that give you instant reports to speed up the decision-making process, as a result, you can save time and money while improving your business performance.

Read more about our Business Intelligence services.

Read about Incorta to see how it has benefited companies by generating reports in seconds 

Contact Us to get your business intelligence tools today.

Implement Oracle Business Intelligence

How is Business Intelligence Transforming Business?

The Benefits of Business Intelligence to your business

From Oracle Business Intelligence Enterprise Edition (OBIEE) to Oracle Analytics Server (OAS)