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These uncertain times have forced every business to rethink how they serve their clients, protect their employees, maintain cash flows to survive and be ready for further ongoing challenges and volatility. Based on conversations with our clients and listening to the problems we hear in the market, we have a series of recommendations for Enterprise Performance Management (EPM), in a post-Covid-19 world.

 

Bolster FP&A Capabilities with Strategic Modeling

The role of financial planning and analysis (FP&A) is heightened in times of crisis. Still, some of our clients are finding that just when they need them, they lack the accelerated insights, scenario-driven insights, and digitally agile solutions FP&A teams can provide at times like this.

If FP&A teams are focused on the pursuit of cost efficiencies, or redirected to concentrate their efforts just on planning and reporting, leadership is missing out on the higher-order value FP&A teams can provide to guide decision-makers to make better decisions.

The annual planning process and quarterly forecast review cycle occupy an unhealthy and disproportionate amount of finance brainpower and resources. Now is a time to change this.

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For example, using the FP&A Automation Business Case Builder, we commonly see clients spending millions of FTE hours on the activities of planning, budgeting, forecasting and reporting. FP&A Automation will stop this and free up thousands of hours to focus on what matters at a time like this.

We recommend that FP&A teams refocus on Strategic Modeling as quickly as possible. Spending time on this, FP&A teams can quickly clarify for business leaders the underlying drivers of the business; help them identify specific actions and initiatives required to manage through the immediate crisis; and, led by a focused plan-for-the-future team, anticipate actions for recovery and growth.

COVID-19 has altered the dynamics and made managing uncertainty an integral element of the planning and forecasting process. But let's be honest, planning based on a specific set of assumptions and targets needs to give way to planning for a variety of possible scenarios and outcomes. 

If your approach to forecasting is based on historical trend analysis, seasonality and year-over-year comparisons, these techniques are no longer viable in planning and forecasting. You are putting your business at risk. 

 

The ability to model faster and with greater accuracy and confidence may be the only sustainable competitive advantage you have.

 

We recommend that finance leaders turn to Strategic Modeling, where the focus is on scenario modeling and rolling forecasts as more effective tools to deal with unforeseen levels of uncertainty. Are you preparing for a range of scenarios rather than depending on individual single dimension models?

 

Why Strategic Modeling?

Unlike traditional planning approaches, Strategic Modeling is designed to answer critical strategic questions faster and with less manual effort. Strategic Modeling is designed for most senior finance leaders to quickly understand the financial implications of several corporate priorities, including:

  • The pros and cons of mergers or acquisitions
  • The impact of divesting whole businesses or parts of an operation
  • The impact of debt on bank covenants or credit ratings
  • How to use cash most effectively
  • Strategies for treasury to reduce the cost of funding

Of course, in the current times of volatility Strategic Modeling is being used to get fast answers to the impact of complex headcount and salary scenarios, including furloughs, layoffs, and salary freezes. 

By creating a Strategic Modeling priority now business leaders can quickly develop a base, best, and worst-case scenarios for financial forecasts. They will be given greater clarity with the ability to simultaneously simulate scenarios that incorporate specific assumptions related to economic recovery, government policy and market demand factors. This agility creates multiple alternative strategies to deal with the variety of ways in which the post-Covid world will evolve. 

To help our clients refocus FP&A activities towards Strategic Modeling, we have created an accelerated deployment approach that will deliver a working model in fourteen days and train FP&A teams to expand the use of Strategic Modeling.

 

You can find out more here: Strategic Modeling Q.accelerator™

 

Now is the time for an intentional approach to bolstering FP&A Strategic Modeling capabilities. It is the most effective way to ensure that companies can generate the critical analyses and executive decision-support they need, in both good times and bad.

 

Additional Resources:

Download the Qubix Strategic Modeling Briefing. 

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