Forecasting and planning in complex environments requires a delicate balance between attention to the granular details and a bigger-picture view of what we’re actually trying to accomplish.
Here at Apliqo, the FP&A process is at the heart of what we do and so in this post, we thought we’d share our 10 commandments for what strong FP&A execution looks like. While somewhat tongue-in-cheek, there’s a lot to be gained from getting these things right. Now, without any further ado, onto the ten commandments.
As we enter a period of recession and higher-than-normal inflation, everyone is scrambling to identify how it might affect their businesses and what they can do the manage the impact. This is a challenging exercise because we don’t really know how persistent this inflation will be and what ancillary effects might come as part and parcel of the macroeconomic shock. As such, companies should be preparing for all scenarios and that’s where a sophisticated FP&A tool like Apliqo FPM can be so useful.
If you were to chart the changes in accounting and financial reporting regulation over the past 20 years, you would see a staggering increase in complexity. In what was already a highly-regulated industry, we’ve seen further administrative and structural obstacles placed in front of large corporations that are supposedly there to protect the integrity and accuracy of financial information – for the good of the stakeholders.
One of the primary economic themes of the past couple of years has been a reckoning in terms of how global supply chains perform in the midst of turmoil. For most of our economic history, there has been a steady increase in globalization over time with key players specializing in various products and services – and then exporting those all over the world. Countries stopped a vast majority of their local production because they could get those goods cheaper and of better quality from elsewhere.
There’s a famous quote from Mike Tyson that says: “Everyone has a plan until they get punched in the mouth.” This is often how we feel when we try to make plans for our business. It looks great on paper and everyone thinks that they’ve built in enough margin for error – and then the circumstances change again and you’re back at square one. It can be very frustrating, we know, but there are ways to mitigate this risk and to improve the overall accuracy of your planning endeavours.
When you’re first approaching any new FP&A system implementation, it can be very overwhelming. There is a lot to get right and the decisions you make early on will have an outsized impact on how the entire system works for you over the long term. Worst case a poor initial decision can have lasting consequences which you will need to live with.
After years of economic expansion, we’re finally seeing the tide turn again as we enter what looks like it will be an extended recession. When you consider the impact of the pandemic, widespread inflation, war in Ukraine, and supply chain issues across the board – this is not something that should surprise us. But if you haven’t been paying attention and considering the impact of a recession on your business, you might find yourself in that position.
In order to drive real value for an organization, FP&A needs to ditch its traditional accounting role for a seat at the executive table. Rather than just crunching numbers and producing obligatory finance statements, companies are counting on their finance teams to drive value by informing key strategic decision-making
On April 28th, 2022, Apliqo will be hosting Part 1 of our 2-part Masterclass on Critical Value Drivers. To kick off the series, we’ll be looking at growth and profitability, two principles that often contend for the company’s focus but both deserve a place in our business strategy.