1. A lack of accurate data and insights
One of the most common problems facing CFOs and finance teams is poor quality data and the inability to use available data to produce useful insights.
This is often because when spreadsheets are edited, updated, and circulated over time, different versions exist, mistakes are made, and the data becomes less reliable.
Without relevant, up-to-date, and accurate data, finance teams can’t produce accurate budgets and forecasts. Plus, C-suite executives and other senior management can’t drill down into these reports and pull actionable insights to help them with decision-making.
2. Labor-intensive and time-consuming manual tasks
Another key challenge facing finance professionals is having to take on tasks such as data entry, budgeting, account reconciliation, and financial planning.
Many also spend far too much time focusing on the smaller details that add little value to the business rather than looking at the bigger picture.
Strategic tasks like FP&A are crucial for generating meaningful insights, yet too many finance teams are spending their time sorting and organizing data rather than analyzing it.
3. A lack of departmental collaboration
Almost every business process and initiative requires effective collaboration across the various different departments. For FP&A, collaboration is crucial to ensure better visibility and more accurate forecasts for the organization as a whole.
Not only this, but collaborative forecasting allows organizations to move away from creating budgets and forecasts in a departmental silo. It enables unified forecasting and updated budgeting in almost real-time.
Despite this, a concerning number of businesses still lack collaboration between the finance department, FP&A teams, and the rest of the company. CFOs need to be aware of this so they can begin bridging this gap.
4. Disconnected data systems and processes
A study found that over three-quarters (77%) of planning processes depend on having access to accurate and timely data from departments across the organization in one way or another.
For financial teams, when it comes to FP&A, this information is crucial to create accurate budgets, align KPIs, analyze results, and set financial goals.
Therefore, disconnected systems and processes can be a real problem for CFOs. This can make it much harder to collect, collate, and share accurate, timely data from different departments.
5. Pressure to provide real-time information
CFOs want their organization to have real-time updates and up-to-the-minute information about the current state of the business, budgets, market, etc. This puts increasing pressure on finance teams to deliver actionable insights and to assist in decision-making.
For businesses without the tools, data, and processes in place to make this happen, there’s a limit to the level of detailed reports and financial planning they can provide. This can lead to frustration on both parts.
6. A lack of consistency leading to inaccurate forecasting
Even those finance teams that have begun to get tools and processes in place to assist with FP&A might find they come up against some challenges. After all, simply having the right solution in place is no longer enough for accurate FP&A - you need to know how to get the most from your tools and techniques.
Disjointed and inconsistent processes can lead to inaccurate analysis and forecasting - this can be a huge issue for CFOs and their teams, as well as having a knock-on effect on the rest of the business.
7. Not having the right tools
When it comes to financial planning and analysis, having the right tools is absolutely crucial. Despite this, lots of businesses are still in the early stages of implementing automation and embracing digitalization.
This means that lots of finance teams don’t have the tools or platforms they need to help them effectively collect, organize, analyze, and process data.
8. Identifying organizational needs and selecting the best partner
And finally, one of the biggest challenges CFOs have come up against is understanding what insights their organizations actually need.
This requires having current-situation discussions with financial teams, conducting thorough analysis, and taking care to select the best partner to assist with their FP&A.
In some cases, businesses may try to find ways around investing in the appropriate solutions, leaving them behind their competitors and struggling to deal with labor-intensive tasks - not to mention being burdened with less accurate and reliable data collection and analysis.
Practical solutions for these FP&A challenges
The good news is there are some simple solutions you can use to help make life easier and more efficient for your finance team, while ensuring accurate budgeting, analysis, and forecasting at all times.
These practical solutions include:
- Encouraging collaboration and connected systems across the different departments within the organization
- Determining what data your business and financial teams need to collect, to ensure the right tools and processes are in place to make this possible
- Selecting the right tools to make all this possible. This includes automation software for time-consuming tasks, cloud-based systems that connect different processes, and tools for real-time reporting and analysis
- Re-evaluate current processes, look at areas that can be fixed to be more efficient or places where new tools and systems could be beneficial
- Do thorough research before selecting and implementing new tools and be sure to choose the right solution for your business needs
- It’s also a good idea to consider what can be done to raise capital to invest in the right tools and systems, as these will be crucial for the success of your finance team and business as a whole
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