In the realm of financial analysis, particularly when reviewing business performance for the preceding month, precision, relevance, and swiftness are paramount. As a finance manager, your goal is not only to enrich management discussions with valuable insights but also to execute your role with agility and intelligence. This dual pursuit of effectiveness and efficiency underpins successful financial planning and analysis (FP&A).
Effectiveness is about doing the right things. It involves providing valuable insights to the management team, offering a solid foundation for strategic discussions and decisions that propel the company forward.
Efficiency focuses on doing things right. It emphasizes smart, cost-effective, and timely execution of tasks.
The Value Grid presents four quadrants to describe stages of FP&A maturity:
- Slow and Ineffective: This stage is characterized by processes that are neither timely nor valuable, and it’s imperative to advance from here. Companies aiming for excellence typically find themselves in the higher quadrants.
- Fast but Low-Value: At this stage, efforts are quick and somewhat accurate but lack deep insights or meaningful analysis. While efficiency is noted, the lack of value-added insights does little to support business objectives.
- The ‘Excel Monster’: Here, the focus is on detailed analysis and generating insights without optimizing the supporting tools. While spreadsheets offer flexibility and low costs, their proneness to errors and dependence on the model creator can hinder the FP&A process’s automation and efficiency.
- Best in Class: This ideal quadrant signifies a blend of rapid, intelligent FP&A execution supported by robust tools. When selecting an FP&A tool, ensure it integrates seamlessly with your accounting system and meets all functional requirements, including reporting, analytics, consolidation, cash flow, budgeting, and forecasting.
Transitioning to Best in Class involves recognizing two potential pathways from suboptimal FP&A practices to achieving top-tier performance, depending on where you believe you are today. In our Best Practice paper we provide you with a framework that helps you asses where you are in maturity today. You can download our paper via this link.
Smartbooks can help improving your FP&A process and moving towards Best-in-Class performance; we will propose best practices and optimal usage of our solution during onboarding and training.
If you want more information about how to design the optimal Plan-to-Perform end-to-end process or Record-to- Report, you can read this in our blogs.