Fremont, CA: As more data becomes available and businesses look to analyze it to extract value, Financial Planning and Analysis (FP&A) is becoming increasingly crucial, but there are still obstacles. Decision-makers' lack of trust in the underlying data driving their analytical applications is one of the major problems. Why, then, is financial forecasting such a difficult task? Because of antiquated planning technology and procedures, financial planning and analysis processes are frequently disjointed and do not incorporate information from operational areas. More significantly, spreadsheets remain the most often utilized tool for non-financial planning. Although the finance team usually employs planning software, spreadsheets are still used for operational planning. Despite several technological developments, spreadsheet usage has not changed significantly.
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.
