Three best practices that can help finance teams capitalize on growth opportunities
Do you remember that old Friends episode where Ross buys a new couch for his apartment, but refuses to pay for delivery? He, along with Chandler and Rachel, work together to move the couch up a flight of stairs. With each step and in anticipation of every turn, Ross yells “pivot!” to warn the group when they need to adjust angle of the couch—but, to no avail.
Without the right tools, processes, or resources, planning can feel similar to hauling an oversized sofa up a narrow flight of stairs. Different business units might need the organization to pivot in one direction, but everyone may not be able to adapt quickly or course-correct with enough time.
This can be especially true for those in finance, as 66 percent of finance professionals say that the pace of competition, in particular, has increased the importance of planning within their company. To this end, state-of-planning research further suggests that finance teams could see improvements in agility and speed through collaborative technology that supports best practices and automates processes.
Three best practices that can help finance teams seize growth opportunities
Disruption, by means of changing regulations, evolving consumer demographics, and innovative business models, has impelled enterprises to explore alternative ways to help drive growth and adapt fluidly within fluctuating markets. As a result, the forecasting process need to be fast, reliable, and flexible and the budgeting process must be faster and more effective.
Yet, finance teams continue to face challenges in their ability to plan efficiently and nimbly. Research shows that processes may be holding some teams back, and 61 percent of finance professionals believe that having the right processes would further improve planning in their organization.
For many organizations, best practices such as zero-based budgeting, driver-based budgeting, or rolling forecasts can allow the business to control costs and capitalize on growth opportunities. Here is a brief snapshot of each best practice and how it can help businesses capitalize on growth in the planning process.
- Driver-based budgeting. Driver-based budgeting is a business planning process that links demand with the operational activities needed to fulfill that demand. Its process can accommodate functional areas with larger elements of variable expense rather than fixed line items.
- Zero-based budgeting. As organizations seek visibility into and control over costs to drive profitable growth, zero-based budgeting can be an effective cost discipline for improving resource planning, staff engagement, and organizational collaboration.
- Rolling forecasts. A rolling forecast is a financial planning concept that can help enterprises find opportunities amid strong competition. It is a process for anticipating the future and better equips an organization to deal with business complexities and market uncertainty.
How Connected Planning technology supports best practices
Connected Planning is an approach to planning that connects different planning processes with one another. It accomplishes this first by connecting plans within business units and then by connecting them across the entire enterprise. Further, it’s an approach supported by powerful technology that provides organizations with a way to plan to the unique rhythm of its own business.
By implementing a cloud-based Connected Planning approach, finance teams have the flexibility needed to support planning best practices. Additionally, finance professionals can use this technology to harmonize processes, analyze business performance, adapt to unexpected market conditions, and foster innovation within the business.
While the concept of better planning might appear simple, its execution is not. By focusing in and evaluating different best practices and the technology that enables them, the office of finance can begin to adopt and pivot with best practices whenever needed.
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