In this era of uncertainty, executives want clearer visibility, improved forecasts, and reliable budgets that support decision-making. And the more capabilities decision-makers ask for, the more controllers are called on to help fulfill financial planning requests.
Because they are generally more accounting-minded than finance-minded, controllers must get up to speed quickly on the fundamentals of financial planning and analysis (FP&A).(opens in new tab)
FP&A combines a set of functions that support an organization’s health: short- and long-term planning and budgeting, management reporting, forecasting, and ad-hoc reporting and analysis. It provides a direct link between corporate strategy and execution.
The good news is that controllers and accounting organizations are well-positioned to help drive exceptional FP&A. The not-so-good news? There are some key hurdles to clear before that can happen. For example, one of the most common challenges that arises during an FP&A process rollout is basic human nature.
“People will typically present resistance to change unless they have substantial familiarity with or are aligned to the benefits,” said Alec Epstein, founder and CEO at Bryant Park Consulting, a NetSuite Alliance Partner. A lack of financial management skills can also stand in the way for midmarket firms whose management professionals have never worked with budgets, completed a budget variance analysis, or reviewed a financial statement.
The perception of loss of autonomy is another roadblock that companies face when rolling out an FP&A strategy. A department owner may have previously been tasked with approving expenses, for example, with no additional oversight required. If the new system includes target-setting and a need to stay within those targets — even if a bigger budget is being provided — there may be some perception of a loss of autonomy on the department owner’s part.
Luckily, there are ways to frame the benefits of FP&A to address these and other concerns.
“When everyone understands the organization's goals and objectives, they can then better align their goals to those objectives,” said Epstein. “Then, they’ll feel as if their contributions — cost reductions, expansion, or the pursuit of specific initiatives — align with those of the overall organization. Seeing the impact of those successful initiatives can be quite empowering.”
Helping managers who either lack financial management acumen or feel they’re losing autonomy understand the benefit of FP&A and budgeting can make for more engaged team members and resource managers.
“Most organizational leaders want to be perceived as being more intentional, detail-oriented, and data-driven,” said Epstein. “You can tap into their desire to become better managers to drive their buy-in.”
The way you frame the shift to using FP&A processes will also affect buy-in.
For example, rather than asking current budget owners to accept “no,” give them data to support their requests. If the warehouse manager asked for a new forklift and had that request denied, for instance, give that manager the financial data needed to justify the purchase request. With one new forklift in place, a warehouse may be able to increase its fulfillment throughput by 20% and effectively increase corporate revenues as a result.
“When managers can provide data to make a business case for their requests, the likelihood that they’ll have leadership buy-in for those objectives will be higher,” said Brian Sowell, senior FP&A consultant at Bryant Park. “And controllers will have more confidence in knowing that they’re making the right decision in providing the requested financial support.”
Bryant Park Consulting has helped companies across many different industries implement NetSuite and roll out FP&A processes. The NetSuite Alliance Partner shares these six tips for success with all companies that want to start leveraging a strong FP&A strategy.
1. Start at the top. To drive FP&A enablement across the entire organization, the CFO, CEO, COO, and other leaders need to buy into the idea and drive the change from the top down.
“If you don’t have this, you will be unsuccessful in your FP&A rollout,” said Epstein. “You need them to prioritize this as an organizational objective and a strategic objective.”
2. Establish a cadence. To show that the time and resources to implement FP&A processes are worthwhile, you’ll have to create a cadence, use clear communications, and make sure the process is well documented and on everyone’s calendars. Adopt standard email templates or process documents, and then use those materials to keep everyone in the loop on what’s happened, what’s coming up, and what needs to be done to keep the project on track.
3. Create a buddy system. “At Bryant Park, we like buddy systems, and we think they make a big impact,” said Sowell. “The more specifically articulated that buddy system is, the more effective it will be.”
For example, a budget owner can benefit from having a finance buddy, while a controller may have several buddies across different departments. Having a buddy gives associates a single point of contact for when they have questions, when they want to better understand how to improve their financial performance, or if they want to analyze their budgets and variances in more detail.
4. Start an open forum. Bryant Park hosts FP&A lunch-and-learns on a monthly or quarterly basis.
“We bring in sandwiches, and everyone sits around and discusses how to analyze variance and how to strategize around mitigating unwanted variances,” said Epstein, who also advises controllers and FP&A associates to set office hours. Let employees come and go as they please. “Sit there with your coffee and see if anyone shows up, but make sure everyone knows your door is open and that they can show up with questions and get support as needed.”
This will build trust internally and show employees that finance is available to support them as they navigate change.
5. Incentivize performance. Nothing drives improved FP&A like incentivizing someone on the bottom line or their ability to hit a target or objective.
“You may want to have budgeting and budget variance analysis in place for a year or two before rolling out this type of incentive program,” said Sowell. “But tying executive leadership and departmental leadership incentives to organizational performance can be a very effective way to get everyone aligned with FP&A.”
For example, if the objective is to increase the sales team’s revenue forecasting accuracy by 15% within the next quarter, management can incentivize the sales team by demonstrating how new FP&A processes will enable them to make more accurate forecasts. The incentive could be tied to the team’s ability to achieve the objective within the given timeframe, such as a bonus or commission for hitting the 15% increased target. Now, the sales team is motivated to adopt the new processes and focus on improving forecasting accuracy, leading to alignment between departmental and management goals.
6. Provide continual training and enablement. Throughout the FP&A implementation process, you’ll probably have new employees coming in and individuals being promoted into new roles who are suddenly assuming budgeting accountability.
“You’ll never be able to stop turnover, so your objective should be to continually reinforce training and enablement,” said Epstein. “That training and enablement will be repetitive and should include standard presentations, email templates, and procedures that keep everyone on the same page.”
Leveraging FP&A Software
Middle-market companies that want to implement FP&A processes often turn to advanced software platforms like NetSuite for help. With these platforms in place, companies can establish processes, get users trained on the system, and start sharing internal data very quickly.
The software also helps staff members operate more efficiently thanks to near-instantaneous access to both broadly accumulated and very detailed numbers.
“With NetSuite, you can quickly and easily see where you should be applying your resources and gain immediate access to dynamic forecasting numbers that are changing daily,” said Sowell. “This, in turn, enables the agile development of companies and supports accurate, continuous forecasting, both of which are key goals of good FP&A rollouts.”
To learn more, watch this product demo(opens in new tab) to see how NetSuite Planning and Budgeting supports FP&A by enabling users to quickly and easily produce budgets and forecasts, model what-if scenarios, and generate reports — all within one collaborative, scalable solution.