7 Signs that Your Company Needs FP&A Software

It’s easy for the financial planning and analysis (FP&A) process to get bogged down by an endless cycle of spreadsheets, outdated software tools and paper. Financial models wind up distributed across multiple spreadsheets, forecasts are both time-consuming and error-prone. Because of this, finance and procurement teams spent an inordinate amount of time  gathering data and using it to create reports.

By the time those reports are completed and shared, the information may already be outdated and irrelevant. This presents major problems in today’s fast-paced business world, where business leaders and decision makers have to be able to base decisions on timely and accurate FP&A data.

“Today, FP&A employees spend an alarming 7% of their time gathering data and only 25% performing actual value-adding analysis. This excess of time spent on data gathering is mostly due to inefficient FP&A processes caused by a lack of alignment of people and systems,” Vena Solutions points out. “To avoid this critical problem and deploy your team of talented FP&A professionals more effectively, you need to prioritize resolving FP&A process inefficiencies and optimizing wherever possible—on a continual basis.”

Seven Signs that You Need FP&A Software

More companies are using specialized finance tools to streamline FP&A and integrate these activities with their broader enterprise systems. Once integrated, FP&A software helps companies reduce errors, produce accurate forecasts and get everyone working from the same data playbook. This, in turn, ultimately improves strategic decision-making.

These advanced software tools also help companies pivot and adjust in unpredictable business environments, where the next disruption is usually lurking right around the corner. With the right software in place, companies can readily assess their financial strengths and weaknesses, and then use those insights to grab new opportunities or address challenges.

Here are seven clear signs that your company would benefit from FP&A software:

1. No idea where your data is or how to use it. Insufficient access to relevant data sources is a critical challenge many FP&A teams experience. When all your data lives in various source systems (such as your GL and subledgers, ERP, CRM and HRIS), this makes it hard for FP&A teams to consolidate that information during analysis. “Data gaps, inconsistent data quality and lack of format standardization are all issues that come with a lack of integration between source systems,” Vena says, “hindering your creation of comprehensive and accurate financial models.”
2. Too many manual workflows. Over reliance on manual data entry and calculations can significantly impede the efficiency of your FP&A process. This reliance not only consumes valuable time and resources, but also increases your risk of error across financial models and reports. “When cumbersome processes require you to pull data from your various sources manually, that data inevitably becomes stale by the time you’re ready to move on to your strategic analysis,” Vena points out. “This limitation can hinder the accuracy of your forecasts and impact your organization’s ability to make timely and informed financial decisions.”
3. Departmental silos are the norm. If every department in your company is using its own systems and data management approaches, then you’re never going to be able to get a full picture of your company’s financial position. This will greatly affect any type of FP&A planning—digital, manual or otherwise—and force employees to gather information across multiple, siloed departments. And the more your company grows, the more divided these departmental silos become. With a centralized FP&A system, you can bring everyone onto a single platform and get them sharing data, information and insights in ways that benefit the broader organization.
4. The company has hit the high end of a revenue threshold. Depending on whom you ask, reporting and analytics can be handled manually on Excel spreadsheets up to about $10 million in revenue. That’s debatable, of course, but the common assumption is that once it surpasses that $10 million threshold your organization will need a robust, dedicated FP&A solution. The platform should provide powerful analytics tools for identifying trends, tracking performance and making data-driven decisions. It should also integrate directly with your core business system(s), and enhance your business planning processes with embedded financial intelligence.
5. Reporting is scarce, difficult and ad hoc. Growing companies have to be able to communicate their financial performance to the business as a whole, including investors, creditors and regulators. If you can’t readily provide balance sheets, income statements and cash flow statements to stakeholders, then it’s definitely time to consider an FP&A platform. Accurate financial reports also reveal trends and insights, which inform strategic decision making and help companies comply with regulatory requirements.
6. No time for analysis. Data may hold the key to better decision-making, but that very data often gets pushed aside due to a lack of time for analysis. In fact, many organizations operate in a reactive state, constantly putting out fires and dealing with immediate problems. This leaves little time for proactive analysis and strategic planning. With accelerated and more accurate reporting, modern FP&A and accounting teams gain more time for analysis. “That’s why good financial reporting solutions also include features that enable analysis of real-time analytics, such as ad hoc variance analysis capabilities, pre-built dashboards and AI-powered BI tools all in a secure cloud environment,” Vena Solutions
7. It’s time to raise outside financing. Whether your company is taking on outside investors, merging with another firm or going public, it’s going to have to answer some tough questions about its financial position, liquidity and long-term prospects. A good FP&A platform will also help you answer questions like: Should we raise debt or equity financing? How will an acquisition or divestiture impact our bottom line? What is our break-even point? And, if revenue declines by X%, will our company still be profitable?

Unlock the Value of Your Financial Data

If any or all of these warning signs are ringing a bell, then it’s probably time to start evaluating FP&A platforms to find one that suits your company well. Start with this ScaleNorth blog, which highlights the pros and cons of some of the most popular platforms on the market. Then, let ScaleNorth manage the solution selection process, implementation and integration work needed to get your new FP&A software aligned with your existing ERP or other business system.

Once in place, your new FP&A platform will help you get over these seven roadblocks, streamline your processes, empower smarter decisions and boost your accuracy. If manual processes are dragging you down, it’s time to let FP&A software unlock your financial data’s true potential.