How to Future-Proof Your FP&A | Tech for Finance Podcast | Episode 005
Oct 24, 2022
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Paul Barnhurst, founder of the FP&A Guy, covers the evolution of FP&A, skills needed in finance, tech stack optimization, and using AI for forecasting. They discuss Canva's success and provide contact info for future discussions.
Transitioning from Excel to advanced planning tools enhances accuracy and efficiency in financial forecasting.
Continuous forecasting and scenario planning offer a more dynamic and adaptable approach to financial planning.
Strengthening business partnering aligns financial planning with long-range objectives to drive value and performance.
Incorporating external data and AI in forecasting processes improves accuracy and decision-making for FP&A professionals.
Deep dives
The Shift from Spreadsheets to Planning Tools
Many finance professionals are transitioning from relying on Excel spreadsheets to using advanced planning tools for financial forecasting and analysis. These tools offer data management, financial modeling, and reporting capabilities, enhancing accuracy and efficiency.
Continuous Forecasting and Scenario Planning
The trend towards continuous forecasting and scenario planning is gaining momentum in FP&A. Companies are moving away from traditional annual budgets towards more dynamic forecasting processes that involve scenario analysis, providing a more flexible and adaptable approach to financial planning.
Enhanced Business Partnering and Alignment
There is a growing focus on strengthening business partnering within FP&A functions to ensure alignment between financial and operational plans. This involves integrating strategic financial planning with long-range objectives to drive value and performance.
Utilizing External Data for Forecasting
Companies are increasingly incorporating external data sources, such as economic indicators, market trends, and industry insights, into their forecasting processes. Leveraging AI and advanced analytics to analyze external data helps improve forecast accuracy and provides a broader perspective for decision-making.
Adoption of Visual Scenario Planning Tools
Innovation in FP&A tools includes the development of visual scenario planning platforms like what if I.io, offering decision tree-based visualizations for scenario analysis. These tools enhance the planning process by providing intuitive and interactive ways to assess different strategic options.
Transitioning Towards Rolling Forecasts
The concept of moving beyond traditional budgeting towards rolling forecasts and continuous forecasting is gaining traction in FP&A. This shift allows for more real-time data analysis, adaptive planning, and agility in responding to changing business dynamics.
Embracing Technology for Enhanced Efficiency
Embracing technology solutions like planning tools, AI algorithms, and visual analytics platforms empowers FP&A professionals to improve efficiency, accuracy, and strategic decision-making. These tools enable faster data analysis, scenario modeling, and collaborative planning processes.
Challenges in Redefining Budgeting Processes
While the move towards continuous forecasting and scenario planning offers significant benefits, redefining budgeting processes to align with rolling forecasts may present challenges in target setting, incentive structures, and stakeholder alignment. Successfully transitioning away from traditional budgets requires a strategic shift in organizational mindset and practices.
This episode is with Paul Barnhurst, founder of the FP&A Guy, and the host of FP&A Today.
During our discussion, we cover everything from FP&A skills, to the ideal FP&A tech stack, as well as future-focused concepts like using AI to predict revenue, using AI in forecasting and planning and what it means to move beyond budgeting.
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