Fremont, CA: As the volume of available data grows and businesses strive to harness its value, Financial Planning and Analysis (FP&A) is becoming increasingly vital—yet challenges persist. One major issue is decision-makers’ lack of confidence in the data underlying their analytical tools. So, why is financial forecasting such a complex task? Often, outdated planning technologies and fragmented processes prevent FP&A from fully integrating data from operational areas. Notably, spreadsheets remain the most commonly used tool outside of finance. While finance teams typically rely on specialized planning software, operational planning still heavily depends on spreadsheets. Despite numerous technological advances, the reliance on spreadsheets has changed little over time.
Major Challenges in Financial Planning and Analysis
Disconnected Systems and Processes:
Integrating the several planning procedures has significant advantages. However, it might be difficult to incorporate plans from various departments inside the company, particularly if you are working with several disjointed spreadsheets. The transition from spreadsheets to cloud-based technologies facilitates the integration of financial planning and analysis with other business domains.
Lack of Business Insights:
Most CFOs nowadays frequently struggle with the low quality of readily available data and their incapacity to convert their business data into crucial insights. Spreadsheets are shared with a wide range of individuals and groups, and over time, copies may arise that change from the original, making modeling challenging and unreliable. Searching for and compiling all the required data is a laborious, manual, and error-prone task without a single source of truth. Spreadsheets cannot support many computations and macros, so your expanding business may not have access to trustworthy models and predictions needed to create accurate budgets and forecasts. Senior management can't delve deeply into company data and obtain useful decision-making insights.
Manual Tasks Take Too Much Time:
Account reconciliation and financial close are two manual processes that finance professionals spend far too much time on. Even now, many finance departments still have trouble reducing their cycle time to half what it once was. FP&A and other strategic responsibilities are essential to producing timely and useful insights. But rather than evaluating data, finance teams waste much time organizing and classifying it.
Inaccurate Budgeting and Forecasting:
Cloud-based financial forecasting tools are highly useful for data collection and analysis, scenario planning, technique analysis, and possible result analysis. However, good financial forecasting requires more than just getting the right answer. The forecasts are typically off because the unreliable economic systems must be changed. Consistency in systems and processes is often lacking, which makes it difficult to make successful decisions.
These are some of the top challenges in financial planning and analysis. Lack of real-time information and lack and collaboration also come under these challenges.
