By Darrell Cox, CFO at Vena Solutions
For companies today, being ready to pivot is—simply put—pivotal. Business conditions are ever-evolving, and change will continue to be constant. And as organizations look to navigate the road ahead, it’s strategic finance teams that are leading the way, driving agile planning processes to help them adapt and grow through change while mitigating potential risk.
As the world economy moves toward reopening, market changes will only continue to persist at a rapid pace. It will be up to forward-looking finance leaders and their teams to continue helping their businesses navigate the new normal, enabling them to pivot quickly if needed by influencing quick and informed decision-making. Here are four agile planning best practices your finance team should use to help your business confidently plan for today and tomorrow.
- Consider cash flow
One of the first things to consider when planning through uncertainty is whether or not your business has enough cash on hand to fund continued business operations. This is where tough decisions start. Executives must evaluate tactics, such as pausing hiring efforts or taking on additional debt, to keep the business up and running. Important aspects to consider include:
- Regularly reviewing business funding sources, such as additional credits, and reevaluating accounts payable procedures.
- Using interactive dashboards and business intelligence tools to make performance data transparent and to enable better cross-functional collaboration in the decision-making process.
- Frequently assessing cash flow—weekly, if not more often.
- Effectively utilize scenario modeling
In times of change, scenario modeling can help your finance team clarify the best path forward. It’s one of the most effective ways to simulate the overall impact of internal decisions and other variables on your business, allowing you to make tough decisions quickly by equipping you with the insights you need to plan with confidence while keeping growth top of mind.
Scenario modeling allows you to test your business plans against assumptions about existing market conditions and any future possibilities, while developing agile models to assess the impact of different scenarios on critical business health indicators, such as revenue, costs, and cash flow. To do it effectively, make sure you choose the right variables and business drivers to test and combine them with key performance indicators (KPIs) from across your business (that means combining financial metrics with non-financial data).
- Implement agile forecasting
The reality for most organizations is that static, annual budgets remain standard practice—and they’re tedious, manual, and become obsolete the second anything changes. High-performing finance and operations teams utilize an agile forecasting process, which allows them to complete the process at regular intervals or on-demand rather than being tied to a full fiscal year.
Agile forecasting provides a more realistic and reliable prediction of the long-term results and growth your business can expect given the most recent actuals and changes in business conditions and also allows for iterative improvement. During times of uncertainty, agile forecasting will help your organization adapt with greater speed, accuracy, and transparency whenever situations change—every re-forecasting iteration is an opportunity to test against any number of changes in business or market conditions.
- Prepare your people with the proper technology
Some of the most analytical and creative minds in business work in the finance department. To help these teams operate even more efficiently, equip them with data-rich, tech-enabled business planning tools that can help drive agile and smart decisions across the business. When evaluating planning software options, ask yourself essential questions, including:
- Does the software provide data insights that are easy for business decision-makers to digest and therefore drive business agility?
- Does the platform combine both financial and non-financial data from various sources to offer a holistic view of business performance and overall business health?
- Will the platform drive adoption and an efficient business planning process by leveraging an interface both finance and business users already know how to use?
A flexible planning platform that consolidates data from across your business and is easy to use will allow you to create an ecosystem for integrated finance-led business planning and enable you to effectively scale your business planning process. And by maximizing your process with agile planning best practices, such as scenario modeling, agile forecasting, and frequent cash flow management, your organization will be well-positioned to pivot so you can confidently plan through change today and tomorrow.
Darrell Cox is Chief Financial Officer at Vena Solutions, a leading provider of the platform that connects people, process, and technology to propel integrated business planning, where he designs the forward-looking business strategies and long-range financial plans that sustain Vena’s growth. Darrell has been a longtime advocate of agile, integrated business planning and tearing down data silos between finance and operational departments
About Vena Solutions
Vena Solutions connects business to finance and finance to strategy to help companies drive success with integrated finance-led business planning. Customers choose Vena for its renowned ease of use, powerful reporting and analytics, and connected platform of applications covering the full spectrum of FP&A and more—from account reconciliation and budgeting to scenario modeling, analytics, and consolidation. More than 800 of the world’s smartest companies rely on Vena to measure and learn from their past performance and to plan confidently for a successful future. For more information, visit www.venasolutions.com.
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