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The Importance of FP&A in Post-Economic Downturn

The Importance of FP&A

1Sep

The effects of the economic downturn that started in 2007 are still being felt today. The modern day CFO has had to deal with such an array of risks over the last 7 years that the ability to plan and forecast has become a vital weapon in their armoury.

Despite experiencing such a period of upheaval, the FP+A function has failed to develop at such an unrelenting speed for many companies. Research by Deloitte demonstrated that in 80% of companies it takes eight weeks or more to complete the budgeting process.

In keeping with this, it’s likely that the companies experiencing the best post-downturn profits are likely to be those that implement the most effective FP+A function. The need for FP+A teams to echo the volatility of today’s economic climate is palpable, and with the technology now in the hands of FP+A teams, there is no reason why they can’t be pivotal in an organisation’s ability to identify risks and plan for change.

The ‘A’ in FP+A is normally seen as a supporting act for the headliner, planning. It can be argued that analysis does in fact take a back seat in times of uncertainty, but when coming out of it, it’s of equal importance. With new finance strategies often being remoulded in line with the post-downturn market, it is imperative that new endeavours are analysed to make sure they are having the desired effect. Clearly, it’s important that a company doesn’t lose even more ground after several lean years.

If a company is doing well, you can guarantee that their FP+A function has something to do with it. Risk must be measured so that a company isn’t just proactive to the marketplace, but reactive. It’s only then that they’ll be able to emerge from the economic downturn as a strong, profitable player.

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