How to Choose Between Periodic and Continuous Planning for Forward-Looking FP&A Teams

Financial Planning and Analysis (FP&A) is one of the most important business functions, involving planning, forecasting, budgeting, and analytical processes to support the company’s financial health.

Nowadays, it is essential for nimble FP&A teams to stay abreast of industry developments in order to ensure that the organization remains on track with its goals.

Choosing the correct planning strategy is an important practice that allows FP&A teams to carry out their duties efficiently.

Continuous planning is quickly becoming the preferred method of FP&A teams to strategize rather than periodic planning and reporting. By taking a proactive approach, teams can adjust plans rapidly in response to changing market conditions and better align with organizational objectives more efficiently.

This continuous cycle of planning, monitoring, and adjusting enables greater business agility for the team to succeed.

Read on to learn about the differences between periodic and continuous planning and reporting — we’ll also take you through how to know when it’s time to move on to continuous planning for your organization.

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What is the difference between periodic and continuous planning methodologies for FP&A teams?

The main difference between periodic and continuous planning methods is the timeframe.

With periodic planning, the timeframe can range from a month to a quarter. Whereas, continuous planning involves a rolling forecast process where FP&A teams regularly adjust their strategies in line with current market conditions.

In the past, companies typically employed periodic planning to create plans for a designated time period. Planning would take place on a monthly, bi-monthly or quarterly basis, and this strategy was sufficient to meet business needs — until the pandemic hit.

The uncertainty has necessitated FP&A teams to revise and enhance their approach in order to remain competitive and successful.

It is now crucial for FP&A teams to ensure that the financial plans are being managed on a continuous basis. The impact of the pandemic on the global economy has FP&A professionals to revise and update their financial plans on a regular basis.

Under the continuous planning methodology, companies enjoy better agility across multiple areas of FP&A. 

With rolling forecasts, you can respond to evolving business conditions as they take place. Through continuous planning, you can optimize financial results, improve agility, and ensure accurate financial plans.

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How do you decide between continuous planning and periodic planning for your organization's needs? 

It can be hard to know which planning approach is best for your business needs - periodic or continuous.

In the past, periodic plans were a viable option, but given the current speed of market evolution, this strategy is no longer effective. With delayed changes to financial plans having the potential to interfere with growth objectives, continuous planning should be considered as the preferred approach.

This is why most FP&A teams are moving towards continuous planning to tackle economic conditions. 

Companies need their financial strategies to be adaptive and responsive, so they can quickly reassess their forecasts according to the most up-to-date micro and macroeconomic information.

Through continuous planning, FP&A teams are also able to analyze different scenarios rapidly, which provides a better understanding of potential revenue and expense changes. Doing so allows them to make informed decisions promptly.

It can be an issue when companies rely too much on periodic planning, as laborious manual tasks such as collecting, analyzing and verifying financial data takes up excessive amounts of time.

Spreadsheets may be the preferred option for some finance teams, but they simply cannot compete with the pace of today's global markets. Automating routine matters can help FP&A teams save time and maintain relevance in the face of evolving economies. Benefits include:

• Real-time, accurate data delivered to leaders quicker
• Easier for finance professionals to keep pace with changes
• Easier to make informed strategic decisions sooner

Investing in the necessary infrastructure to support continuous planning is essential. Periodic planning should be replaced with more agile, up-to-date processes in order to account for any changes in today's ever-changing markets.

Making this transition is vital for companies to remain competitive and responsive.

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What are some of the benefits of using continuous planning for FP&A teams? 

Continuous planning creates a robust framework for smarter and agile financial decision-making. At the core of this strategy, business is a continuous process and hence, planning, forecasting, reporting, and decision-making must also be continuous.

The benefits of continuous planning start with FP&A teams but extend across every aspect of the business. 

Compressed cycle times

Continuous planning helps with compressing cycle times through the automation of routine and laborious tasks that otherwise slow down FP&A tasks. As cycle times are shortened, planning and decision-making processes are expedited. Moreover, decisions are taken across the entire business more frequently.

This model strengthens the company with agility and speed to pivot when required.

Staying on top of ever-changing market conditions can be difficult without the right infrastructure in place. By enabling a course correction, FP&A teams are better armed to help management adjust their strategies and guard against unexpected outcomes while capitalizing on new opportunities.

This puts them in an advantageous position, empowering them to make informed decisions that have greater chances of success.

Taking Ownership with FP&A

Continuous planning provides FP&A teams with a great opportunity to extend their financial decision-making expertise into other areas of the company. This includes:

• Revenue planning
• OPEX planning
• Annual operating planning
• Workforce planning
• Cash flow forecasting

With this ownership of the finance function, other business teams are better able to contribute to the planning process in meaningful ways. By providing unique plans, insights, and tailored data models for each business unit involved in data analysis and planning, FP&A teams can enable those units to make informed decisions more effectively.

These various teams can then work towards achieving the strategic objectives of the organization as a whole, allowing the FP&A team to become an instrumental driver of organizational growth.

Collaborative and Connected Planning

Continuous planning acts as a unifying force that brings data, context, and conversations together.

Most experts agree that effective planning cannot take place in silos. The decision-making process must be a collaborative exercise that needs expertise and engagement from different stakeholders.

However, it is pertinent to note that silos still exist as FP&A teams and other teams across the company require different types of data, need varied data analysis tools, and have different timelines.

As a result, the company can experience a breakdown in the communication process.

Through continuous planning, FP&A teams can encourage inter-departmental collaboration to be a part of the decision-making process. Business units are then more likely to share ideas, learn from each other, and better learn the impact of their decisions.

Gradually, these business units can make informed decisions driven by the transformation ushered in by continuous planning.

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Challenges associated with periodic reporting, budgeting, and forecasting

While some companies feel comfortable with periodic planning, they confront significant challenges that impede their growth. Here are some of the challenges that companies will confront with periodic reporting, budgeting, and forecasting:

• Slow Processes: When it comes to periodic planning, FP&A teams are slowed down by manual and time-consuming operations. As a result, FP&A teams are unable to deliver accurate insights fast enough to help finance leaders make informed decisions. 
• Operating in Silos: FP&A team members are so bogged down by manual tasks, that they are unable to allocate any time to other activities. As a result, they are unable to ensure a seamless transition from FP&A to xP&A that would otherwise help create a planning culture across the departments.
• Lack of business partnership: FP&A teams are focused solely on their core operations as the entire process is manual. A lot of time is spent on the identification and removal of errors from the data. Hence, they are unable to reduce the length of planning cycles.

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Why you need an integrated planning platform for continuous planning

In order to stay competitive in fast-paced markets, spreadsheets and manual processes just won’t do. 

By implementing an integrated financial planning platform like Pigment with your existing tech stack, you can seamlessly transition to continuous planning and unlock the true potential of your company.

Run multiple what-if scenarios in a few minutes and create unbreakable formulas for accurate data analysis. No more time wasted on data collection and hygiene - Pigment will free up the time of your FP&A teams to take ownership of the finance function and help other business units optimize their performance.

Discover how Pigment can help you on your journey towards continuous planning. Book a demo today!