Why do FP&A (financial planning & analytics) on a BI platform?

Every business owner understands the importance — and pitfalls — of financial planning and analysis (FP&A). For some mid-market businesses, the process of generating the most up-to-date numbers that reflect an accurate view of business performance hasn’t changed much.

Usually, a business’s finance team is the go-to group of professionals who have a system in place; some businesses may have started moving toward automated software, while others prefer to stick with traditional spreadsheet-based planning.

The evolution of FP&A

For finance teams, FP&A has always been an essential business requirement. Large enterprises often have the resource to devote much time and attention to forecasting for changes in demand, as well as planning for the future. Many have already invested in software to complete these tasks more efficiently and accurately. Today, mid-market businesses are also adopting FP&A, recognizing it as a logical solution to help manage increasing data volumes and business complexity.

However, the majority of mid-market companies tend to follow a more traditional FP&A approach. Involving little more than a company’s enterprise resource planning (ERP) solution, spreadsheets (often with complex models), potentially some business intelligence (BI) analysis, and collaboration with the wider business via email.

The problem with this approach is that before you can begin strategic financial planning, you must first build an up-to-date data foundation. This requires pulling data from multiple sources, then manipulating and consolidating it into one master spreadsheet. Since this is typically done manually, it is very time-consuming and prone to human error. As a result, so much effort is spent wrangling business data that there is little mental bandwidth left for strategic planning.

According to the 2024 Chartered Accountants ANZ technology survey, 69% of respondents cited human error as the main challenge to maintaining data accuracy. An unsurprising outcome considering 82% of those respondents still use Excel spreadsheets for real-time reporting.

Next gen FP&A tools give you trust in your data

Today, business owners are keenly aware that information is power. With a clear consolidated view of financial and operational data, customized budgets and forecasts for sales, operations and HR can be included in your strategic planning. With finance teams and CFOs facing increasing pressure to align financial goals with the overall strategy of the business, the need to perform FP&A on a robust BI platform is becoming a must have.

Moving your financial planning and analysis process from static spreadsheet-based reporting to a platform anchored by a business intelligence foundation can empower cross-functional teams at all levels of the business. Enhancing collaboration with fast and secure access to up-to-date data presented in a format that’s easy for everyone to understand and use.

Here are 6 reasons why a BI foundation is essential to successful FP&A

1. Strategic planning relies on accurate, consolidated data

Strategic planning begins by reviewing current and historical data. Unearthing valuable companywide intelligence requires a team commitment to data discovery. For example, your team may be collecting operational data such as inventory by hand and inputting it into a spreadsheet. With a BI platform, financial and operational data are automatically consolidated into one centralized, easy-to-access platform. Data is pulled from your ERP, CRM, HRIS and spreadsheets, feeding up-to-date data across reports, financial statements, budgets and forecasts. With accurate, reliable data easily accessible, you can immediately delve into FP&A without first having to spend a huge amount of time wrangling raw data from across the business.

2. Your business wants FP&A to align with wider business goals

With clear visibility of financial and operational data it becomes much easier to onboard the wider business with the bigger financial picture. Likewise, the goals of sales, operations and HR are clearly identified to the finance team without them having to take on the role of the ‘budgeting police’. Department heads can toggle between a consolidated view of the business and then drill into a single departmental view and use assignment, submission and approval processes to provide a customized plan for their team. With everyone accountable and drawing from a centralized data source, integrating cross-functional goals with your overarching business goals becomes more efficient and effective.

3. Your business and its requirements are more complex

Your financial team will likely have their own spreadsheet-based system in place for managing financial planning, budgeting, modeling, and performance reporting. However, for businesses with complex structures including multiple subsidiaries, branches or global locations, chances are these spreadsheets only make sense to the finance team. Other departments may not have the skillset or time to labor over these numbers searching for specific figures.

Think of how beneficial it would be for cross-functional teams to easily understand how the broader business plan impacts their specific budgets and forecasts, and how their planning goals reverberate across the entire business. So, even as your business scales with increased data volumes and complexity, a BI platform unites your teams around accessible, accurate, consolidated data. This way, FP&A can be more focused on achieving your collective business goals, rather than simply chasing a collective view of your data.

4. You want to improve sales forecasting and demand planning

Having a strong BI foundation is crucial for effective sales forecasting and demand planning. Forecasts can be tailored by sales rep, region, product, or customer segment and then seamlessly integrated into financial budgets and inventory plans. Easy access to live sales data facilitates daily performance monitoring, allowing you to analyze patterns and make agile adjusts to demand forecasts in response to market changes. A granular view of sales and inventory data aids in precise analysis, while high-level insights facilitate benchmarking across branches. With BI tools nurturing a more data-driven culture, you can optimize resource allocation, improve cash flow, and make more informed decisions for better stock management.

In the CA ANZ tech survey, CFO of the Tahbilk Group, Michelle Symeonidis explained how they turned to the Phocas BI and FP&A platform to consolidate data from across its business into interactive, drillable dashboards. “We can look at a particular product [wine] and ask, ‘How many of those have we sold over the rolling 12 months? How many tonnes of grapes will we need for that product?’,” she says.

5. Market volatility means accurate reforecasting requires a real-time solution

Making sense of fluctuating markets and how market changes will impact your business requires up-to-date data. FP&A software built on a BI platform enables you to use the budget workflow and worksheet to simply re-forecast estimates during the budget period, or to prepare a rolling forecast which will form the basis of the next year’s budget. You can prepare your forecasts easily, by bringing in current year actuals to-date and revising budget assumptions. You can also model different scenarios to determine the impact on the financial position according to each scenario.

6. A clear picture of your cashflow will ensure current and future profitability

Understanding your business’ cashflow should go beyond interpreting monthly spreadsheets. A cashflow statement should be a resource customized to the needs of your business. A financial planning and analysis solution will unlock the true financial health of your enterprise and provide granular-level visibility. Cross-functional teams will be fully equipped to understand the business landscape and strategize how to best meet new challenges.

Regardless of your specific industry, the right business intelligence solution will take your financial planning data beyond basic spreadsheet analysis. Modern BI increases visibility across financial and operational data so your financial team can forecast across the whole business, plan scenarios for future employee headcount, and budget collaboratively.

To learn more about how the Phocas BI and FP&A platform can support your strategic planning, download this eBook: Companywide Financial Planning and Analysis.