The role of business intelligence and FP&A in achieving superior financial performance

In fast-paced business environments, achieving superior financial performance remains the main game. Finance teams are often Excel-based so are seeking new ways to improve operational efficiency, automate operations and improve profitability. One powerful combination that has emerged in recent years is the integration of business intelligence (BI) with financial planning and analysis (FP&A). This innovation helps business people harness the power of consolidated data to drive strategic decision-making, fast-track financial reporting and achieve outstanding financial results.

This blog will delve into four key ways BI and FP&A contribute to superior financial performance by establishing one single source of truth, enhancing cashflow management, fostering greater collaboration, and ultimately driving increased profitability.

Business Intelligence software delivers one single source of truth

In the realm of data management, the concept of "one single source of truth" refers to having a consolidated, accurate, and up-to-date dataset that serves as the foundation for all business decisions. In an era where data is abundant yet often scattered across siloed software systems and departments, the automation of this single source of truth is crucial.

BI platforms play a pivotal role in consolidating financial data with operational data from multiple sources into a centralized system. Data platforms like Phocas integrate, validate, consolidate and automate data from disparate sources such as Enterprise Resource Planning (ERP), spreadsheets and customer relationship management (CRM) solutions. This connection ensures that all stakeholders are working with the same, up-to-date information.

The benefits of having one single source of truth are numerous. It enhances decision-making by providing the whole team with accurate and reliable data. This reduces the risk of errors that can arise from relying on outdated or inconsistent information. Centralized data also streamlines reporting processes like month end statements or daily management reports as they all draw from the same comprehensive dataset, ensuring consistency and accuracy. A single source of truth fosters trust and transparency within your business, as people at all levels can rely on the data they use and feel confident.

FP&A software helps with cashflow management

Cashflow management is the lifeblood of any business. Effective cashflow management ensures that a CFO can meet the company’s financial obligations. BI and FP&A tools are instrumental in monitoring and forecasting cash flow, providing real-time visibility into the financial health of your business.

These tools offer templates and access to data that support detailed budgeting, forecasting and scenario analysis.

FP&A tools help create detailed and accurate budgets by drawing on the single source of truth in the BI platform. This ensures that all aspects of the business are considered and included in your planning, providing a comprehensive view of the expected cash inflows and outflows. As the data is also up-to-date and linked to changes in the balance sheet and profit and loss (income statement), it makes three-way cash forecasting much faster and easier. A strong handle on cashflow makes change more achievable ensuring that cash flow forecasts remain relevant and accurate.

Scenario analysis also enables the finance department to explore different financial scenarios and their potential impact on cash flow. The FP&A tools help you model best-case, worst-case, and most-likely scenarios, so you can decide how you want to represent your headcount or inventory expenses in your budget.

Efficient cashflow management has a strong impact on a company's financial health. By leveraging BI and FP&A tools, businesses can maintain optimal liquidity levels, avoid cash shortages and reduce stress levels. This financial stability not only supports day-to-day operations but frees up people to consider and drive long-term planning.

Greater collaboration

One of the significant challenges of many businesses is the existence of departmental silos, where information and expertise are confined within specific teams. This fragmentation can affect collaboration and the flow of critical information. BI and FP&A systems help break down these silos by providing a central platform for data sharing and analysis.

With integrated BI and FP&A, financial insights are no longer restricted to the finance department. Instead, these KPIs are accessible to various departments like operations and sales empowering everyone to make data-driven decisions aligned with the company's financial goals.

New Zealand-based lubricants and energy giant, TotalEnergies NZ, switched to Phocas FP&A and BI for real-time access to its data. When it came to international reporting, Phocas helped the business retain internal codes when reporting to their counterparts in Singapore. This removed the manual process of extracting code and re-coding it in a spreadsheet.

With the branches treated like independent businesses under one legal entity, it is crucial for TotalEnergies NZ to know their true company margin.

From a finance function, we are checking our margins every day. We have a report that is automatically emailed out of Phocas each day to check for any low margins,”

Craig Roberts, Chief Financial Officer at TotalEnergies NZ

Increased profitability

BI tools also help users identify inefficiencies and areas for cost reduction within an organization and identify new growth opportunities. By analyzing data from various operational processes, purchasing managers can pinpoint underperforming product lines and distribution channels. For example, in a wholesale distribution company, your analysis might reveal that certain product lines are consistently slower to sell, prompting you to order less with a longer lead time.

Then by adding FP&A software helps set and achieve your financial targets. By leveraging data-driven insights from BI, finance and other business partners can use the FP&A features to create budgets that align with the company's overall objectives.

Ongoing analysis and reporting are essential for measuring the success of budgets. The business intelligence tools integrated with FP&A also create real-time dashboards and performance metrics that enable continuous monitoring of financial performance. This visibility allows companies to track their progress towards financial goals, make necessary adjustments, and ensure sustained profitability.

The integration of business intelligence (BI) with financial planning and analysis (FP&A) can help achieve superior financial performance. By establishing a single source of truth, business people have access to accurate, up-to-date information, reducing errors and encouraging collaboration. Enhanced cash flow management, supported by integrated BI and FP&A tools, provides real-time visibility into the company's financial health while creating dynamic budgets and rolling forecasts. This integrated approach ensures buy-in across the business and actionable insights for new opportunities or mitigating risks in a timely manner.