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Given the continued presence of Covid-19 and an ever-changing business environment, companies are trying to change their strategic planning. Nic Dennis, ANZ Country Manager at BOARD International shares nine steps on how executives can improve their financial planning in a pandemic constant world.

Accurate financial planning and analysis is essential for any company – it supports the business decision process and supports strategic visions. Unfortunately, the methods traditionally used by companies are becoming less and less effective. These methods struggle to cope with the large number of variables in the marketplace, the ever-changing conditions, and the inability to clearly see what lies ahead.

To overcome this, companies need to fundamentally change the way they approach financial planning and analysis. Instead of leaving it to the finance department, every part of an organization needs to be actively involved in the process.

Important steps to improve financial planning

When looking at companies that have successfully developed their financial planning processes and skills, it becomes clear that there are a number of steps that need to be followed. The nine main steps include:

1. Start at the top
To achieve long-term and effective planning, the direction for change must come from above. Management needs to be convinced of the benefits of the activity and communicate them to employees across the organization. Understand what effective planning can achieve and make sure everyone involved understands the difference their input and efforts are making.

2. Assess your data quality
The planning can only be as precise as the data used in carrying out the process. Thoroughly review all data sources and ensure that the data you are using is up-to-date and reflects current operating conditions and performance.

3. Promotion of cooperation
Changing the way financial planning and analysis is done will take time. Because of this, it is important to encourage collaboration between all parties involved to ensure that progress is maintained. In addition to maintaining motivation, this ensures that necessary changes of direction can be made quickly in order to keep the change on course.

4. Identify the major drivers
Work with key decision makers across the organization to understand and analyze all of the key business drivers. It will then be possible to create a strong link between these and the goals of the organization. This will also allow a deeper understanding of the financial implications of these drivers.

5. Create a driver-based plan
Once the key drivers are identified, create a solid plan based on them. This can first be modeled in Excel or other toolsets and, once proven, implemented in an integrated planning method.

6. Provide an integrated planning system
To ensure the plan stays on track and is easy to evaluate, use an integrated planning platform. This platform will link strategic plans with business and operational planning. Set a goal for the horizontal, vertical, and cross-organizational integration of these plans.

7. Automate where possible
A major goal in advancing the approach to financial planning and analysis is to enable an organization to better respond to changing conditions. To make sure this can happen as quickly as possible, automate as many of the manual tasks of the finance team as possible. This allows the team to focus on more value-adding activities.

8. Carry out scenario planning
The age of uncertain market conditions has made the importance of scenario planning clear. Say goodbye to a uniform future perspective of conventional planning and forecasting methods and use new driver-based models in cooperation with the company and develop multiple future perspectives.

9. Focus on decision making
Once the financial planning and analysis development is complete, move on to the decision making task. Use the built-in planning system along with accurate data to create scenarios and determine the likely effects of various decisions. This enables better decisions and plans to be made that have a positive impact on the overall operations.

It is very likely that this age of uncertainty in the business world will continue for a long time. If steps are taken now to improve financial planning, companies will be in a much better position to survive and thrive in the months and years to come.