Over the past decade, the role of FP&A as a function has expanded to affect more parts of the organization directly. Financial analysts are no longer purely number-crunchers. They are expected to guide companies through good and bad times with detailed and actionable financial insights.
The financial planning and analysis department is now the financial controller, value manager, and strategic partner.
With the evolution of the role, companies must give their FP&A teams a much-needed advancement in financial planning software. Here’s what to look for when searching for the perfect financial planning software to invest in for the future of your team.
A quick overview of FP&A in 2022 and beyond
The Ukraine conflict, financial market downturns, and disruptions from the pandemic have led to unprecedented levels of economic uncertainty.
During an economic downturn:
- Budgets are tightened
- Revenue and profit stagnate or decline
- Projects face increased scrutiny for ROI
- Cash conservation becomes a pressing priority
For finance, this creates two unique opportunities.
Firstly, when the economy is showing frequent signs of uncertainty, FP&A teams are required to provide insights, reports, and forecasts for more areas of business.
Secondly, the organization relies on finance to give guidance and direction when results are missed or projects need to be trimmed.
In other words, finance is becoming a strategic center of the organization, to be the single source of organizational data, resulting in better planning and decision-making.
FP&A teams are expected to be business partners
Expectations from FP&A teams are changing. The recent shift in external pressures has resulted in the need for finance teams to be business partners. There is a greater demand from leadership for finance to drive performance.
The opportunity to invest in financial planning software for FP&A teams is further enhanced by the massive quantity and variety of data available in an organization.
Finance leaders can help other departments interpret and understand this data. By digging deeper, FP&A can highlight the story this data is telling and generate business insights.
Now, more so than ever, finance needs to manage multiple stakeholders, present important issues uncovered by the data, and set a clear agenda that aligns with business goals.
Data accuracy and availability are more important than ever
The benefits of granular, accurate, and timely insights into the business are explicable, in both good and bad times. Accurate data allows finance to recognize trends, estimate how they might impact the business, and make more informed decisions in response.
However, most organizations continue to run into roadblocks owing to siloed and disconnected data. When it comes to understanding the implications of revenue streams, headcount planning, the impact of external changes on forecasts, and next-level scenario planning, data in spreadsheets is fragmented, prone to errors, and opens the door to misinterpretations.
High-efficiency FP&A teams rely on more modern solutions and technologies like financial planning software to streamline data aggregation, validation, and consolidation and deliver insights.
Furthermore, these insights need to be communicated quickly and clearly to the broader organization in the form of easy-to-understand reports, charts, and dashboards.
Signs of the perfect financial planning software
Access to tons of data integration
As your business scales, FP&A teams need to collect data from multiple business applications including ERP and accounting systems, CRM, billing and payment systems, ATS and HRIS, data lakes, and BI among many others.
The traditional copy-and-paste approach to syncing data from several applications into spreadsheets leaves plenty of room for errors.
A financial planning software saves your FP&A teams hours that would otherwise be spent on the labor-intensive and repetitive work of collecting information from various sources, aggregating this data, and manually inputting this information.
Financial planning software Pigment supports data integration, it integrates with your existing tech stack, automates data consolidation, and serves as a single source of truth.
Ensuring accuracy and timeliness of data
Timeliness is vital for financial forecasts. Your FP&A function needs to quickly identify opportunities and risks when the markets change so that you can pivot if needed.
Powerful financial planning software for FP&A teams supports your financial processes, reduces the time spent on mundane activities, frees up time to analyze data, and makes more accurate forecasts.
Ability to align cross-functional teams
In the financial planning process, inputs in one area are often the result of outputs from another function. For example, sales data flows into HR or finance.
FP&A teams need improved visibility and reduced process friction to improve collaboration, enhance planning confidence, and improve decision-making across the organization.
The best financial planning software is designed to enable collaborative movement across departments, throughout the planning process.
To help align cross-functional teams across your organization, here’s how the FP&A platform breaks down data silos:
- Helps everyone understand the true meaning of data using Excel-like syntax.
- Allows you to create stunning charts to identify trends and personalize the views to display key features.
- A collaborative dashboard lets you track colleagues, leave comments, respond to concerns quickly, and deliver insights on your models using a display text widget.
80% less data crunching than manual alternatives
Frequently monitoring and fine-tuning your models manually is time-consuming. Especially when large amounts of data are involved, it is impossible to know if all potential errors are addressed. And imagine doing this every time your leadership board looks to your team for answers.
That’s where financial planning software simplifies data preparation and frees up your headspace to focus on what matters the most.
Some of the important FP&A features that help you gain efficiency are:
- Automatically imports important data from all business apps and cleans up the data so that you can spend more time analyzing it.
- Model faster and get flexible models running in a matter of hours with autocomplete formulas and calculated items.
- Powerful object-based modeling helps you avoid errors and aggregate your data to create models that are scalable and easy to maintain.
- The powerful collaborative workflow allows you to gather inputs and data from colleagues in a hassle-free way.
- Drill-down features allow you to identify components of your formula and manage and track version history to identify input or model changes.
Superior forecasting and predictions
Financial planning software for FP&A teams can easily forecast and run multiple scenarios to spot both risks and opportunities. Features like running what-if scenarios, automated workflows to gather cross-department data, and connecting your models allow finance teams to handle an ever-increasing need for timely, accurate, and granular forecasts.
The importance of scenario planning
Scenario planning is the burning need of the hour for your business.
A financial planning software captures all possibilities including managing volatile scenarios and planning for best and worst case outcomes. In addition, you can create multiple scenarios and run the scenarios to complete your mole data across multiple future paths for the most optimal path forward.
Beautiful presentations and reporting capacity
FP&A managers are responsible for examining, analyzing, and evaluating the organization's financial activities and mapping out the future. They must be able to clearly explain the specific financial concepts to busy executives, craft a story that illustrates financial results, and provide guidance to stay on track with the overall plan.
Financial planning software empowers finance teams to:
- Source data by integrating with all your data sources,
- Sync data into a comprehensive picture, and
- Tie the findings into beautiful presentations that tell the story of your long-term plans.
In short, it improves your reporting capacity beyond repetitive reporting into strong storytelling that inspires helpful conversations and drives critical decisions.
Enterprise-grade data security, change tracking, and access rights
Your data must be secure at all costs, be it something as confidential as revenue forecasts or as simple as daily expense reports. A financial planning and analysis software like Pigment offers enterprise-level data security for the highest possible data security standards.
All data on the platform is encrypted and you can control who can view, modify, and use data across different hierarchies. Features such as audit trail, snapshot, and identity management make Pigment one of the most secure platforms for confident financial modeling.
Examples of companies that have revolutionized FP&A in 2022
Brazilian logistics unicorn Loggi
Previously, Loggi’s budgeting process was decentralized and siloed, leading to issues in:
- Maintenance and scalability
- Data integrity and audits
- Limited visibility into P&L data for the leadership
As Loggi’s FP&A team wanted all their data sources connected and in one place, they used the FP&A platform Pigment for budgeting, cash flow management, and reporting on KPIs.
Digital product design tool Figma
Previously, Figma used spreadsheets that served as a consolidated view of everything. However, as they scaled, the challenges with Excel included:
- Multiple users could not work on models at the same time
- Not designed for collaborative use
- Lack of single source of truth
- Heavy dependency on the finance team to physically send data
- Manual headcount reconciliation process
Figma then selected Pigment as their financial planning software because:
- The tool is flexible and the team could adopt it to fit their needs
- It’s collaborative for hiring managers, recruitment teams, and stakeholders to access models, reports, and dashboards created in Pigment
- Extensive reporting helps finance teams draw insights and share beautiful reports with stakeholders
Financial planning software makes your FP&A teams more productive
Without compromising on data accuracy, Pigment allows the FP&A department to become business partners: transitioning from historical reporting to forward-looking analytics for dynamic and continuous planning.