Economists are revising their 2024 forecasts and while not completely removing economic turmoil from the vision, they are certainly predicting a milder recession than they did a quarter ago. Mid-sized businesses can capitalize on this in a way that accelerates growth without risking gains made to this point. Doubling down on strategic FP&A is a smart action to achieve corporate goals in 2024.
Mid-Market companies need to maintain top line growth while simultaneously improving operational efficiency. Strategic financial planning and analysis (FP&A) places these key objectives at the heart of the business strategy. At its essence, strategic FP&A is about figuring out where to invest in the business and where to maintain or pull back to reach objectives. It requires the right talent armed with data. If you haven’t already done so, now is the time to assess your FP&A capabilities for each of your businesses and shore up any weaknesses as 2024 unfolds.
How to assess your FP&A capabilities
FP&A capabilities essentially separate into two buckets: Tools & People. Both are critical to a business’ success. The tools enable the FP&A professional to deliver on goals so we’ll put them aside and first address people.
The People
Seasoned FP&A professionals are experienced in forecasting across a variety of industries, applying learnings from each role to their current situation. They do more than budget, manage cash flow, set KPIs or provide reporting. While these activities are foundational, the FP&A professional marries those skills with the ability to see around corners and avoid financial missteps, investing in the proper growth vehicles for the long term.
Additionally, today’s FP&A professional is well versed in the application of finance technologies to enhance the precision of and improve forecasts and reporting. Digital and AI will only continue to evolve the technology applications available to finance, and the FP&A pro adopts and adjusts to meet the specific needs of the business by staying on top of new platforms and programs. Doing so makes the job of analysis and decision making faster and easier.
Other areas the FP&A professional must account for include ESG and Security. Environmental, Social and Corporate Governance has moved to the forefront of how companies are valued, and the FP&A professional incorporates this component into strategic planning from the onset, not as an afterthought. The result is a more robust, comprehensive strategy for the long term. Whether a company is privately held or public, ESG strategy is a critical corporate strategy element that investors, partners and employees now seek in the companies they conduct business with and for.
Security is predicted to remain a focus for most companies and the FP&A professional must partner with IT in the selection and deployment of all security platforms/technology. Countering external threats is a team effort. FP&A is consulted in the comprehensive security requirements for finance and accounting, along with other functional areas, as IT designs and upgrades platforms. For example, companies that store customer data at any level could suffer significant financial repercussions if their security is breached and those data are compromised.
If your business has strong FP&A support, you’re halfway there. If not, consider bringing on board a seasoned professional to work with your team ensuring that the right processes and platforms are in place, or to lead FP&A for the company. Growth Operators matches the right FP&A professionals to the client’s need, delivering the best possible outcome. Choosing interim or fractional leadership in FP&A is a great way to quickly address talent gaps while keeping the business moving forward.
FP&A Technology Tools
Once you have identified the right FP&A leadership for the business, the next step is to address finance technology platforms. The importance of robust, accurate reporting and dashboard delivery aids in the ability to plan and adjust the plan along the way. This doesn’t have to be a huge investment, it can be built over time. Your FP&A leader will analyze the tools used today and provide prioritized suggestions on what to add to enhance internal finance and strategic capabilities.
A well balanced finance tech platform does three basic things:
- Improves employee/team operational effectiveness
- Enhances the company’s ability to deliver on strategy
- Provides the tools and systems to speed decision making and planning
The right technology for your company integrates with existing systems, but also has customizable functionality. Again, your FP&A professional will analyze your current processes and platforms, then advise on how to improve them. This may result in a simple, one time tech addition, or unfold as several enhancements made over time. One certainty is that technology is here to stay and will continue to evolve in finance as well as all operational areas. It’s important to stay on top of your capabilities and address any gaps. Failing to do so could cost the company in significant missed revenue.
While modeling, analytics and reporting form the cornerstone of most finance tech platforms, other capabilities to look for include:
- Standardization for planning across multiple departments
- The ability to share data across systems (current & new)
- Automation that makes data accessible to many
- Diagnostics that dig into causes, aiding predictive analytics
Adopting these capabilities streamlines what was just a short time ago, highly manual processes. With technology, human capital is spent on analyses and strategic planning, instead of building reports. This is an ROI improvement most leaders can get behind.
Why Growth Operators
Frequently, organizations lack the leadership and experience in FP&A needed in today’s ever-evolving environment. And most PE or VC sponsors cannot commit the level of time and attention required to dig deep into the data as well as consider and prioritize the needs of the various functional departments. If that’s the case, consider bringing in proven experts that offer the experience, knowledge and sense of urgency required to not only deliver budgets, forecasts and plans, but also build sustainable processes into the organization, stabilizing the team.
At Growth Operators, we embed with your teams and roll up our sleeves to get the work done. Our Growth Pros work as interim or fractional FP&A executives who lead and/or assist with these critical processes. We treat each assignment uniquely, meeting the company where it is to ensure we develop the best possible solutions. Because all Growth Pros are operators, they are familiar with hands-on business stewardship and work diligently to achieve results. This client case study illustrates how our process delivers effective solutions.
Growth Operators:
- Instill best practices into the organizations we support.
- Work with a sense of urgency – we understand the need to accelerate growth and show tangible results
- Identify insights and any gaps in the business – and fix them
- Approach the business holistically, not just from a Finance silo, improving planning and allocation of crucial resources
- Bring a key knowledge of technology and tools, matching the best options to a portfolio company’s needs, as well as implementing, integrating and training the team.
Our Growth Pros range from CFOs to VPs to directors and managers. All bring the same level of commitment to accelerating client growth, value creation, and work side-by-side with internal teams. Can you afford to wait any longer to assess your FP&A capabilities? Why not add the expertise you need and address these critical action items now? To learn more, schedule a call with us.