The relevance of xP&A, or extending financial planning and analysis (FP&A) concepts outside the finance department, has risen lately. If you want to enhance cooperation and insight into organizational performance and create better organizational decision-making, you need to look at operational and financial data.
When a corporation is divided into departments, each department is responsible for its operational activities and plans. Financial data, such as budget and expenditure, are consolidated and reported to the finance team. As a result, departmental planning becomes fragmented. Organizations must combine these departmental plans to have a complete picture of the business for meaningful, company-wide planning. They are well-positioned to lead this endeavour since their financial planning and analysis (FP&A) teams currently collect financial data throughout the firm and undertake resource allocation, budgeting, forecasting, and reporting.
These rapidly shifting market conditions demonstrated the need for improved forecasting and performance metric consolidation techniques. As a result of COVID-19’s business interruptions, organizations in a broad range of industries received a wake-up call and learned the need to extend planning and analysis to the whole organization. They learned a lot about the business as a result of that process. As a result, CFOs and controllers are now more empowered to lead company-wide strategic initiatives and improve business results.
Difference Between ‘xP&A’ And FP&A
FP&A teams examine a wide range of financial numbers, including income, spending, taxes, and capital expenditures, to establish strategies. Their insight must be actionable, fast, accurate, and exact. Data-driven responses to business issues are the actual value of the expanding FP&A department. FP&A examines data from a financial and strategic perspective.
xP&A utilizes the same strategic approach outside of the banking industry. To this end, xP&A researches to unearth insights and make better business decisions. Many firms, for example, are extending planning to other departments like human resources for labour planning and sales for sales planning, with both plans linked back to the corporate financial model.
What Methods Do They Use to Do This?
FP&A has been changed by introducing new tools and technology that enable organizations to plan continuously and collaboratively for quicker and better insights.
For What Reasons is ‘xP&A’ so Critical?
Businesses across all industries struggle with segregated data and limited resources, which means accounting and finance aren’t immune. Business process owners and their staff are put to the test when making plans based on outdated information and inefficient processes.
Other departments may benefit from using FP&A concepts to develop a comprehensive business strategy. It may provide FP&A with a complete picture of the organization’s performance while also fostering cooperation across teams and business units. Using this planning platform, each department may plan independently while yet being linked to the overarching company financial strategy. This contributes to the improvement of organizational agility by relying on data-driven insight rather than instinct when making choices.
How Does “xP&A” Help?
When it comes to financial and operational information, xP&A calls for more efficient procedures and deeper insights. Many advantages accrue to the organization when planning activities are standardized across departments or divisions.
Business Alignment
Join disparate teams and divisions better to withstand instability and change in the business environment. Create a strategy that integrates all aspects of your firm, including finance, operations, and specialized business lines. With integrated planning, you’ll be able to see the ramifications of changes throughout your company right away. Finance, for example, can swiftly determine where it can acquire the things the company needs, how they will be delivered, and when they arrive if the supply chain and sourcing difficulties are faced with extended planning discipline.
Improved Visibility
xP&A offers to finance a comprehensive perspective of the complete company, including the risks and resources that define it when connected with other departments and business divisions. As a result, you can develop a strategy that supports the whole business rather than one that the finance department drives. Workforce planning in HR, for example, provides finance with improved access and insight into the number of workers the firm will need during the peak season to assist in deciding the correct mix of skills and a competitive rate of pay to encourage employee retention.
Identifying Growth Opportunities
The ability to see the whole business and the data that supports it allows FP&A to locate new growth prospects for its expansion or identify areas for cost reductions. Thus, numerous business factors can be optimized, and the company can advance sensibly at each stage. It may help uncover growth prospects in sales and marketing by analyzing macroeconomic trends, creating product-level projections, and forecasting the return on marketing investments.
Collaborative Planning and Decision Making
xP&A helps leaders to work together and make better plans. It all begins with establishing a common set of statistics that everyone can rely on and then developing from there with accurate, up-to-date information. Your time will be better spent analyzing and communicating insights to stakeholders when you can rely on the data. The data becomes “our numbers” instead of “finance’s figures” when your collaborators in other departments can take greater ownership of it. With this, you can empower all of your teams to work together toward a common objective while also following a common plan.
Using xP&A in the Real World
Customers of NetSuite are good examples when you want to understand the importance of enterprise-wide planning in the next years. With NetSuite Planning and Budgeting, customers are already extending the solution beyond financial planning and working toward goals like labour and sales management and demand management.
Telecommunications customer’s FP&A team begins the process with the HR team, which gives vital information on the complete workforce to FP&A. To identify where and when to expand, how many employees are needed at each new site, and what practice areas should be expanded, a workforce strategy that incorporates budget, revenue predictions, and the overall corporate financial plan is essential.
NetSuite Planning and Budgeting’s automation of labour-intensive planning, budgeting, and forecasting processes, as well as financial and operational data, enables finance teams to produce plans and forecasts, generate reports, and model what-if scenarios quickly and easily, all within one collaborative, scalable solution. The financial and operational strategies of the whole business may be developed and refined by the finance teams since they have control, cooperation, and visibility. These are just some of the many benefits of NetSuite Budgeting and Planning.
Conclusion
xP&A implementation requires a single platform that can adapt to various requirements while maintaining data quality and process control. This necessity, according to Gartner, forces companies to choose fewer providers in favour of solutions with a wide range of capabilities. One such solution is the unified Board Decision-Making Platform, which provides a consistent data foundation on which all reporting, planning, and forecasting operations are based.
If you’re seriously considering integrating NetSuite into your business, Folio3 can help you through the process with its expertise in NetSuite customization, integration, and implementation, thereby ensuring that you get software that’s custom-made to your business needs.
