Last updated on Feb 27, 2024
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Understand the business context
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Use the right tools and methods
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Apply critical thinking and creativity
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Communicate effectively and persuasively
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Learn continuously and adapt quickly
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Seek feedback and improvement
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Here’s what else to consider
Financial planning and analysis (FP&A) is a key function for any business that wants to optimize its performance, strategy, and decision-making. FP&A involves forecasting, budgeting, reporting, and analyzing financial data to support business goals and objectives. However, FP&A can also be challenging, complex, and time-consuming, especially in uncertain and volatile environments. How can you improve your FP&A skills and techniques as a management consultant? Here are some tips to help you.
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1 Understand the business context
The first step to improving your FP&A skills is to understand the business context of your client. What are their vision, mission, values, and goals? What are their industry, market, and competitive dynamics? What are their strengths, weaknesses, opportunities, and threats? How do they generate value and revenue? How do they measure and manage their performance? By answering these questions, you can gain a holistic and strategic perspective of your client's business and align your FP&A efforts with their needs and expectations.
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Improving financial planning and analysis involves several key techniques. Adopting advanced financial modeling methods can enhance forecasting accuracy and scenario analysis, allowing for more informed decision-making. Implementing robust data analytics tools and software can streamline data processing, uncovering meaningful insights and trends. Thirdly, fostering cross-departmental collaboration and communication ensures alignment between financial objectives and broader organizational goals. Additionally, leveraging key performance indicators (KPIs) and metrics helps monitor progress and identify areas for improvement.
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To improve financial planning and analysis, organizations should:- use relevant and accurate financial data- develop a comprehensive financial model- create a rolling forecast- use sensitivity analysis- develop customized dashboards and reports- implement a robust financial reporting system- engage key stakeholders throughout the processAdopting these techniques can help organizations better understand and manage their finances, make informed financial decisions, and improve overall financial performance.
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It’s important to get an understanding of the companies business model and business environment. Understand how they operate and who they do business with. This will provide an idea of their strategy which will help understand how their core financial processes come together into their PnL, cash flow, and core management KPIs.
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- Katrin Lebedeva Board member and ex-CEO of digital consulting company | 14+ years experience in management consulting with focus on Telco, Tech, Digital
FP&A tools are essential for data-driven decision-making and tracking company health, signaling real and potential problems. Key points include:1. Context, business model, and goals are critical in FP&A transformation.2. Ensure data source consistency and strive for real-time data, especially in large corporations with legacy systems.3. Model complexity should be user-friendly; simpler with acceptable error margins is better than overly complex.4. Adapt processes to new reporting systems, including improvements.5. Use informative dashboards for management to identify issues and make timely decisions.
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2 Use the right tools and methods
The second step to improving your FP&A skills is to use the right tools and methods for your data collection, analysis, and presentation. Depending on the scope, scale, and complexity of your project, you may need to use different software, models, frameworks, and techniques to perform your FP&A tasks. For example, you may use Excel, Power BI, Tableau, or other tools to create financial models, dashboards, and reports. You may use SWOT, PESTEL, Porter's Five Forces, or other frameworks to conduct external and internal analysis. You may use variance analysis, trend analysis, ratio analysis, or other techniques to interpret and evaluate financial data. The key is to choose the tools and methods that suit your objectives, data quality, and audience.
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If you want to improve the speed, accuracy and insights in FP&A you will need tools which provide a holistic and real time view into business performance. Obtaining this without the right digital ecosystem is difficult and inefficient. Ultimately there has to be a single source of truth for data which directly feeds analytics and planning tools. Cloud data platform+BI+EPM fully integrated and working together.The right technology will eliminate low value activities and allow teams to focus on value adding activities and data driven decision making.
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- Marcio Valério da Silva Administrador especialista Consultoria Empresarial, auditoria e Perícia Judicial e Extrajudicial Financeira, Representante Institucional do CRA/SP em Franca-SP
Para planejamento financeiro temos que ter antes de tudo os registros financeiros em relatórios como DRE (Demonstrativo de Resultado de Exercícios), Fluxo de Caixa e Balanço Patrimonial. Mesmo que não seja possível ter todos os controles acima, em uma pequena empresa por exemplo, ter o DRE e o Fluxo de Caixa são controle mínimos e fundamentais e permite analises de resultados que conduzirão a análise financeira para a implementação de indicadores que irã ampliar o nível de assertividade da análise.
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3 Apply critical thinking and creativity
The third step to improving your FP&A skills is to apply critical thinking and creativity to your data analysis and interpretation. FP&A is not just about crunching numbers and producing reports. It is also about finding insights, patterns, relationships, and opportunities that can help your client improve their performance, strategy, and decision-making. To do this, you need to ask relevant and probing questions, challenge assumptions and biases, test hypotheses and scenarios, and explore alternatives and implications. You also need to use your creativity to generate new ideas, solutions, and recommendations that can add value and impact to your client's business.
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4 Communicate effectively and persuasively
The fourth step to improving your FP&A skills is to communicate effectively and persuasively with your client and stakeholders. Your FP&A results and recommendations are only as good as your ability to convey them clearly, concisely, and convincingly. To do this, you need to tailor your communication style, format, and content to your audience's preferences, needs, and expectations. You also need to use visual aids, stories, examples, and evidence to support your arguments and messages. You also need to listen actively, respond constructively, and invite feedback and collaboration to build rapport and trust with your client and stakeholders.
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5 Learn continuously and adapt quickly
The fifth step to improving your FP&A skills is to learn continuously and adapt quickly to the changing and evolving business environment. FP&A is not a static or one-time activity. It is a dynamic and ongoing process that requires constant monitoring, updating, and adjusting. To stay ahead of the curve and deliver value and impact to your client, you need to keep learning new skills, tools, methods, and best practices in FP&A. You also need to keep track of the internal and external factors that affect your client's business and adjust your FP&A plans and actions accordingly.
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As business environment is continually changing, so it’s the company data. Tracking and managing internal and external data is a crucial step in understanding current financial performance and making necessary adjustments.
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6 Seek feedback and improvement
The sixth and final step to improving your FP&A skills is to seek feedback and improvement from your client, colleagues, mentors, and peers. Feedback is essential for identifying your strengths, weaknesses, gaps, and opportunities in your FP&A work. It can help you improve your quality, accuracy, efficiency, and effectiveness in your FP&A tasks. It can also help you enhance your professional development and career growth as a management consultant. To seek feedback and improvement, you need to be open-minded, humble, and receptive to constructive criticism and suggestions. You also need to act on the feedback and implement the changes and improvements that can help you achieve your FP&A goals and objectives.
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7 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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To enhance financial planning and analysis, several strategies prove effective. Firstly, embracing advanced financial modeling techniques aids in accurate forecasting and scenario analysis. Secondly, integrating robust data analytics tools enables deeper insights into financial trends and performance indicators. Moreover, fostering collaboration between departments fosters alignment of strategic goals and financial plans. maintaining flexibility in approaches allows adaptation to dynamic market conditions, ensuring resilient financial strategies.
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Few additional points: 1. Utilize technology to automate tasks, improve data analysis, and gain deeper insights from your financial data. See if you can automate and now there are proven AI tools as well 2. Break down silos and encourage collaboration between finance and other departments, such as marketing, sales, and operations.3. Implement robust data governance practices to ensure the accuracy, consistency, and reliability of your financial data.4. Proactively identify and manage financial risks to protect the organization's value.Hope this helps and inspires. Thank you Deepak
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