Companies and finance departments are today challenged by many external forces that affect them in different ways. This leads to the need for many to review their planning and control further. In this post, you will get six well-explained tips on how to achieve a more effective control and planning process.
Challenges of the Finance Function
After a longer period of stability, companies are facing several external challenges today. The finance function faces increased pressure on cost efficiency and increased importance of strategic focus. A CFO needs to navigate the organization towards defined goals in an increasingly changing environment. Controllers handle growing amounts of data, need to ensure accurate forecasts, evaluate scenarios, and manage the company’s need to make faster decisions while acting as advisors in the business.
The external challenges place new demands on the planning process and the important relationship with decision-makers responsible for results; who need to be able to follow up on their areas of responsibility, identify deviations from the plan, and make well-informed decisions.
For many companies, it’s about finding solutions and streamlining planning and decision-making. ” Improving the technical conditions ” is what the finance department says is most important.
Do you need to start from scratch? Make sure your business can answer these questions:
General Challenges in the Planning Process
- Uncertainty: The future is always uncertain and therefore it can be difficult to make accurate forecasts. This uncertainty can lead to incorrect planning.
- Complexity: Planning can be complicated, especially for large organizations with many moving parts. This can make it difficult to create and follow an effective plan.
- Time: Planning can be time-consuming, which can divert resources from other important tasks.
- Resistance to change: Employees may resist changes proposed in a plan, which can make it difficult to implement the plan effectively.
General Possibilities in the Planning Process
- Strategic Direction: By establishing clear plans, a company can determine its strategic direction, which can give your company a competitive advantage.
- Resource efficiency: Planning can help you use your resources efficiently and eliminate waste, which can reduce costs and improve profitability.
- Predictability: Planning can provide a degree of predictability in an uncertain business environment. This can help the company prepare for future challenges and opportunities.
- Motivation and engagement: By involving employees in the planning process, companies can increase motivation and engagement, which can lead to improved productivity and increased employee satisfaction.
6 Tips for More Effective Planning and Management
Despite a sometimes bleak reality, there are ways to manage and plan better for those who want to be at the forefront.
Six enablers for more effective planning and control, which can help you manage planning in a changing environment:
1. Digitize for increased impact and competitive advantage:
- The transition from simpler planning tools like Excel to more structured and dedicated processes and tools.
- Ensure consistent and quality-assured data for reliability and accuracy.
- Improve processes to optimize productivity and avoid bottlenecks.
- Integrate source systems and create a seamless work environment.
- Take advantage of existing digital ecosystems and collaboration platforms.
2. Involve the business in better planning and commitment:
- Include the entire organization in planning through driver-based planning models.
- Create an intuitive planning process to increase participation and engagement.
- Improve the accuracy and quality of planning information.
- Reduce lead times and create a more positive work environment.
3. Work goal-oriented and use rolling planning models:
- Use rolling and dynamic planning models to adapt to changes and uncertainties.
- Gain better insight and precision in planning.
- Adapt planning to the needs of the business and follow the business rhythm.
- Use simulations and scenario analyses to explore different possible outcomes.
- Make planning data available for rapid decision-making.
4. Adopt a holistic approach to value creation:
- Include different perspectives such as the environment, sustainability, the employee perspective, and the customer perspective.
- Integrate economic, environmental, socia,l and governance factors.
- Create a more sustainable and successful business.
5. Transform strategic planning:
- Integrate strategic planning and goal setting into the overall planning process.
- Focus on key KPIs and communicate clear goals.
- Define plans that lead towards the strategic goals.
- Involve employees and ensure participation.
- Link strategic and financial planning.
- Follow up and adjust if necessary.
6. Take advantage of technological innovations:
- Use predictive forecasting for more precise decisions.
- Use benchmarking and AI-enhanced analytics for insights and efficiency.
- Apply Natural Language Processing to analyze text data.
- By implementing these enabling measures, you as a controller or CFO can improve the planning process, increase efficiency, and achieve competitive advantages for your company.