Periodic variance analysis has got to be one of the hardest jobs in Financial Planning and Analysis (FP&A). Every month you go out to the various operations teams and shared services leads and ask them why their forecast is not on budget or most recent forecast. The answers are almost always lacking in detail and…
It seems like Financial Planning and Analysis (FP&A) is the jack-of-all-trades and the master of most others. FP&A answers strategic questions, forecasts for the future, ensures a timely accounting close, prepares board reporting packages, preps the executive team, divests a division, analyzes product line profitability, performs due diligence on an acquisitions and oh yeah does…
In a September 10, 2008 investor conference call, Ian Lowitt, Lehman Brother’s CFO, set forth a strategy to investors that he, along with other Lehman executives, believed would save the firm. During that call, Mr. Lowitt stated among the detail of the plan the following statement: “And even under the scenario of limited debt-issuing capacity in 2009,…
Most large organization spend a considerable amount of resources performing some type of financial forecasting. Conversely, small and medium-sized businesses spend less time on planning for the future. Larger organizations have more to lose, therefore, the need to actively assess changes in the market to take advantage of opportunities or avoid risks becomes a more…
Various studies show that increasing financial forecast accuracy will lead to higher profits, lower inventory levels and a higher share price. By how much varies by industry, time period forecasted, forecast measure, business model and a myriad of other factors that all play into the financial forecast itself. With the speed of business constantly increasing,…
All budgets and forecasts are inherently inaccurate at the onset. Even the most freshly minted prediction of the future 2 minutes ahead have unknown inaccuracies that make it imprecise. Many people get confused with this and think that because a forecast can never be 100% accurate that it is useless. That is not the case. Financial…
The Association of Financial Professionals (AFP) recently released a guide to its members entitled, “FP&A Organizational Structure: Trends and Best Practices”. It states the three basic structures of FP&A: Centralized, decentralized and hybrid. With the increased volatility being seen in every market due to the increased pace of change caused by technology, social and demographics…
With a constant focus on the bottom line, many finance professionals have a difficult time understanding why sales and marketing cannot make the numbers they promised. Working in sales is hard work and is not about just taking prospects out to fancy dinners and lunches to build relationships. In addition, customers are fickle, inconsistent and…