Main Content
Despite FP&A being a core strategic function of a business, too often it’s a department undermined by process inefficiencies that prevent it from meeting its full potential.
Today, FP&A employees spend an alarming 75% of their time gathering data and only 25% performing actual value-adding analysis. This excess of time spent on data gathering is mostly due to inefficient FP&A processes caused by a lack of alignment of people and systems.
To avoid this critical problem and deploy your team of talented FP&A professionals more effectively, you need to prioritize resolving FP&A process inefficiencies and optimizing wherever possible—on a continual basis.
We’ve created this guide to help you get started. What follows are seven essential steps to FP&A process optimization:
Insufficient access to relevant data sources is a critical challenge many FP&A teams experience. When all your data lives in various source systems (such as your GL and subledgers, ERP, CRM and HRIS), this makes it hard for FP&A teams to consolidate that information during analysis. Often, teams will resort to manually pulling data from their various systems to input into a static Excel spreadsheet.
Data gaps, inconsistent data quality and lack of format standardization are all issues that come with a lack of integration between source systems, hindering your creation of comprehensive and accurate financial models.
Over reliance on manual data entry and calculations can significantly impede the efficiency of your FP&A process. This reliance not only consumes valuable time and resources, but also increases your risk of error across financial models and reports.
When cumbersome processes require you to pull data from your various sources manually, that data inevitably becomes stale by the time you’re ready to move on to your strategic analysis.
Organizations facing this challenge often find themselves unable to respond effectively to rapid market changes, emerging trends, or unforeseen events due to the lag in data updates.
This limitation can hinder the accuracy of your forecasts and impact your organization's ability to make timely and informed financial decisions.
Much of the budget creation process involves sourcing data from department heads outside of finance. Each budget contributor will prepare their numbers and send them to Finance, usually in the form of a spreadsheet.
But this only creates more work for FP&A teams as they have to consolidate all the disparate spreadsheets provided to them by budget owners, not to mention chase contributors when they don’t provide their numbers on time.
This arduous workflow is largely a result of budget contributors sitting on the outside of the budget creation process.
If budget owners could more easily contribute to the budgeting process instead of depending on finance to input and consolidate their numbers, not only would FP&A teams free up more of their time, but budget owners would gain valuable visibility into the business.
The first step to any process improvement effort is to assess where things currently stand. In the case of FP&A process optimization, this means comprehensively evaluating your existing FP&A operations—from workflows, to software tools, to communication channels and more.
Start by making a list. Include all of the people, processes, and technologies that play a role in your FP&A processes. Outline how they interact, have dependencies and collaborate to complete certain tasks.
Data is the most important asset to any FP&A process. Unfortunately, it’s also the one most commonly mishandled.
FP&A teams have to source information from many teams and business units across their organizations, and without the right processes and controls in place, data can quickly become disjointed and compromised.
Solving this problem can’t be done overnight, but you can begin by mapping out all your current data flows to understand your data sources (which source systems and people the data is coming from) and how it needs to flow into your processes.
Documenting your workflows in a visual way—such as a flow chart—can help you identify where there are inefficiencies throughout your workflows and opportunities to optimize them.
Vena allows you to build workflows for your FP&A processes visually. The best part? Each block you build represents a task you can automate—with reminders for inputs and approvals—in the platform.
To keep up with today’s rapid pace of business FP&A teams need to focus on building centralized, standardized and automated processes to handle the sheer volume of data they process daily.
Wherever possible, remove manual tasks that present risk for data compromisation and/or simply take too much time to execute, and replace them with automated alternatives. Achieving this requires integrating your various data sources such as your ERP, CRM and HRIS into one central database—ideally, a complete financial planning software solution.
Aggregating your data in an automated way also allows you to spend less time verifying the data and more time digging into what it means.
For instance, after consolidating their reporting—which was once 12 standalone spreadsheets—into one template with real-time data aggregation through Vena, the manufacturer Mitsubishi Chemical Group has gained a deeper understanding of their budget versus actuals.
“We've actually been able to identify several system items that we didn’t understand before. So for example, our variable production costs—they were just a big black hole before,” said Cindy Tynan, Mitsubishi’s Director of Finance. “And now we’re able to understand exactly what makes up those costs and say with certainty, ‘Here's what happened.’ [...] So it's the quality of the explanation that's really improved.”
You can read Mitsubishi Chemical’s full story here.
Encouraging your FP&A leaders and employees to embrace cross-functional collaboration helps build stronger relationships with accounting, sales, operations and other key stakeholder functions that contribute to successful financial management and planning.
Involving stakeholders from other departments more directly into your processes can also lead you to uncover insights you wouldn’t otherwise have.
For instance, with the help of Vena, shoe retailer Schuh evolved their budgeting and forecasting processes that were once very finance-centric to involve their wider team. Receiving direct input from their IT team on short-term CapEx planning and from field leaders on sales targets has helped them improve their forecasting accuracy.
“We wanted to open up budgeting to wider operational management,” explained Mark Raley, Schuh’s Head of Finance. “We have a regional field team who are looking after a number of stores. Because they're in the field, that kind of cloud environment is ideal for them. They can give their input at a station, at an airport, in the back office or in a store. It's very flexible and gives them the ownership that they probably felt they didn't have previously. Our old top-down approach to budgeting has been turned on its head the way it should be. They’re owning the store.”
You can read Schuh’s full story here.
Poor version control can be the downfall of your FP&A function—when it occurs, decision makers act based on inconsistent and conflicting data, negatively impacting strategic decisions.
Optimizing your FP&A processes requires strong version control measures that ensure the right data makes its way to decision makers every time.
For instance, you can require that edits or changes to reports be made directly in your financial planning platform, where updates are automated in real-time for users to see.
This approach helped UK-based talent assessment technology provider Thomas International eliminate their version control issues when working with other departments during the budgeting process.
“Everyone inputs their budget into the template, then it's just about constantly revisiting those assumptions,” said James Leisk, FP&A Manager at Thomas International on how his team uses Vena. “They don’t need to look at a new template or familiarize themselves with anything new, they just need to revisit the numbers they put in last time. That's made running a forecasting process much easier, as it just means revisiting the last iteration rather than having to start again.” You can read Thomas International’s full story here.
Another best practice for maintaining control of your reports is putting permissions around who can view and edit reports to limit editing capabilities to those with the right knowledge, skill sets and context.
Adding more structure around your financial reporting processes is also a key element of resolving FP&A process inefficiencies.
As you work to optimize your FP&A processes, structure your reporting processes as much as possible by:
When reports are consistently accurate, shared frequently and delivered effectively to the stakeholders who need them, you help decision makers self serve and minimize your time spent searching for information and answering questions.
For instance, with Vena, real estate consultancy firm MountainSeed set up automated reporting to deliver reports to their executives on a monthly basis.
“All the teams are happier with the reports they're getting now because we have the ability to customize them,” said Max DiPlotti, MountainSeed’s FP&A Manager. “They can do their own digging if they want to, or they can just look at the overview.”
You can read MountainSeed’s full story here.
Putting what we’ve discussed here into practice requires adopting the right financial planning tools to manage your FP&A processes and connect their many moving parts.
The best option to achieve this is a comprehensive planning solution with features for:
When your teams all use the same tool to manage critical processes such as budgeting and forecasting, you gain a single source of truth that enables more consistent and accurate financial reporting and decisions driven by real-time insight.
Taking the time to optimize your FP&A processes—even when that means overhauling the way things have always been done or implementing new tools and procedures—is an investment in your company’s financial future.
When your FP&A function is strong, it can be a strategic contributor that in turn drives higher profitability and growth.
While it may require some effective change management and take time to gain complete buy-in, putting in the work to streamline your FP&A processes ultimately makes for a better experience for finance employees and stakeholders and better results for your business.
Did you find this article helpful? If so, you might also enjoy this related content:
Get advice from experts on automating your finance operations and making sure you have the right people and processes in place as well.
As Vice President, FP&A at Vena, Tom Seegmiller is responsible for strategic finance, including business partnering, budgeting and forecasting, with a focus on optimizing enterprise value. Tom is instrumental in the formulation of the financial narrative for the executive leadership team, investors and board members. Tom has always had a focus on driving enhanced business decisions through leveraging financial and operational data. He is an experienced finance executive, having most recently led the finance team at Miovision Technologies. Prior to that, he was in senior FP&A leadership roles at OpenText. Tom enjoys golfing, skiing, exercising and traveling in his spare time, but most importantly, he loves spending time with his wife and daughter.
