Putting the “A” Back in FP&A (Financial Planning & Analysis)

People who perform the financial planning and analysis (FP&A) function in the finance organization put together and update the budgets and forecasts. In many companies, the “A” portion of this activity gets short shrift. That’s because the mechanical process of pulling together and collating the data takes up so much time that very little remains for analysis. The result is that planning and budgeting is a less useful business tool than it could be. Improving FP&A can give executives and managers more insightful analytics and easier access to analytical tools that support more accurate and timely planning and budgeting.

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10 Rules for Highly Effective BPM: A Manifesto for the New Economic Reality

In October 2008, Apple CFO Peter Oppenheim commented that “visibility is low and forecasting is challenging,” which seemed to be a polite way of saying “We have absolutely no idea what will happen tomorrow.”

In June 2010, UPS CFO Kurt Kuehn reported that “normally we are very obsessive about building good and accurate plans, but as the recession dragged on we realized that trying to build a forecast was almost a waste of time.”

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New Conditions Call for New Approaches to Forecasting and Planning

It has been more than three years since the global economic crisis battered investors, consumers and businesses alike. While there are signs of stabilization, the environment continues to be full of surprises, as witnessed by the recent battles over the U.S. debt ceiling. The situation in Europe offers little relief, with a series of sovereign debt concerns casting doubt on the fate of the Euro and the ongoing solvency of the European Union’s weaker participants. With slow growth and high levels of employment in the United States, the outlook is for more uncertainty.

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How to Build a Zero-based Budget

A zero based budget is a budget where every dollar you earn is assigned to a category in your budget. Your income minus your expenses equals zero – zero based budget. The idea sounds very simple, and it is, but the real value in creating and following a zero-based budget is that it requires you to plan very deliberately ahead of time and track it very closely as you go through your month.

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