Thanks to today’s digital technologies, the finance sector is doing things that were previously unimaginable. Tools such as end-to-end multi-dimensional data access, for example, make it possible to enable complete visibility into both the enterprise and customer data. As such, the finance function within businesses will go from mere accounting and reporting to full-on predictive analytics providers. In doing so, they will also be offering increased value to their business partners; increasing their competitive advantage.

The next generation of digital finance will deal with analytics to create additional value and manage risk. This will shift the focus from traditional accounting and processing to cross-functional integrated service models that will also use robotic process automation. This digital reconfiguration will push finance as an insight generator for their respective business partner. There are three main elements that will influence this transformation:

  • Analytics Competency – This service goes beyond just analyzing financials. It will also assess product management, customer expenses, as well as the project trends for the future. Employees will use self-service to explore data in real time so as to better understand the financial effects of their business decisions. In other words, they will no longer have to rely strictly on the finance department to do it for them.
  • Integrated Business Services – This bundle of services will include both accounting and transaction processing, coupled with tasks typically found in other business areas and functions. It’s estimated that by the end of 2020, over 80% of traditional finance services will be covered by cross-functional teams.
  • Communications and Control Center – Control, compliance, communications, and risk management will be covered by these centers. They will consolidate fundamental functions such as statutory accounting, tax, treasury, compliance, and investor relations. A digital data warehouse will automate most routine tax reporting and compliance, allowing tax professionals to focus on optimizing the company’s tax structure and make it more in line with the company’s overarching business strategy.

Given these trends, financial planning and analysis (FP&A) leaders are under increased pressure to deliver more accurate and timely financial analysis. To do so, they will need to focus on four key areas in order to step up their financial analytics capabilities. These include:

  • Better planning and budgeting
  • More integrated financial planning
  • Performance reporting
  • Modeling and forecasting

By being able to generate insightful financial analysis in a time-efficient manner, financial leaders will become a valued and trusted business partner. Analysis plays a key role in today’s digital business environment, allowing companies to keep pace with all the challenges and future trends that haven’t yet been anticipated. Below is a short rundown of all the four aforementioned areas that need to be addressed in order to implement state-of-the-art financial analytics.

Planning and Budgeting

When a business constantly resorts to spreadsheets to conduct their operations, it’s a strong indicator that they work with an underdeveloped budgeting process. The less companies rely on Excel, the more they tend to favor purpose-built FP&A solutions capable of providing common database management access, data scenarios, and related workflows management. These types of solutions will also offer a much higher degree of transparency.

Immature financial planning capabilities tend to take up to nine months before they can produce any meaningful results. In most cases, however, this large time discrepancy will mean that the results will be outdated and/or irrelevant. This is particularly true in today’s fast-changing and evolving business environment.

Aside from the constant use of spreadsheets, other signs of a lagging budgeting process are very little financial data analytics, simplistic reporting capabilities, and limited transparency and visibility into business value insights. A higher level of maturity in this regard is characterized by a focus on business drivers that influence the financial line items.

Integrated Financial Planning

The majority of finance departments are only now starting to mature in terms of integrated financial planning (IFP). This is the main reason why so many finance departments struggle to generate any meaningful business insights in any timely and/or accurate manner. By comparison, a higher level of development in terms of integrated financial planning will also translate into more collaboration with other business departments. For instance, a well-developed IFP program will be able to target specific financial-planning objectives from external business areas and generate new insights that will be useful for the sales team.

Performance Reporting

Another telltale sign of immature and underdeveloped finance functions is when they struggle to understand why their generated financial reports are the way they are. Spreadsheet deliverables will tend to only focus on accounting numbers. They lack most external inputs and financial data analytics. This makes it incredibly difficult to generate any meaningful insights. While less mature FP&A capabilities tend to rely on traditional planning and budgeting tools when it comes to forecasting and modeling, more mature reporting capabilities would take a more comprehensive approach. They will be able to capture and integrate a wider array of information from multiple sources than their more traditional counterparts.

Modeling and Forecasting

While traditional FP&A capabilities tend to rely on static planning and budgeting tools for modeling and forecasting, advanced capabilities leverage in-memory computing (IMC) and advanced analytics to provide faster and more reliable predictive analytics. They can also make real-time adjustments and place a higher emphasis on high performance. Less mature FP&A capabilities, on the other hand, have an extremely difficult time coping with highly complex business environments. To provide greater maturity in these areas also implies the possibility of providing faster and more accurate analytics capabilities that are able to provide real-time adjustments.

To smooth implementation in line with their strategic plans, CFOs will have to avoid some of the most common pitfalls related to accurate forecasting. These include the following:

  • Update Prioritization – Many CFOs will feel tempted to make too many changes too fast. They will try implementing new technologies while changing incentive schemes at the same time. However, it’s a far better alternative to clearly define which forecast variables will be updated and how often, even before the transition takes place. So, for example, if a transportation company will define its forecasting schedule based on the attributes of each variable, the finance team will decide on the right update frequency based on each of those variables’ volatility, economic profit impact, and the level of control they will have over the response.
  • Gradual Implementation – When looking to transition towards rolling forecasts, it’s best to look at it as an evolution and not as a single event. The many challenges that can arise during such a transition are rarely anticipated by finance leaders who look at it as a sort of one-time adjustment instead of an iteration. It’s far better to create a comprehensive outlook of your current processes and mitigate your management’s resistance to change. You will also need to help your line managers improve their forecasting consistency over time. It’s important to keep in mind that progressive companies will make many adjustments over the months and years following the initial adoption of rolling forecasts.
  • Spending More Time on Analysis – Companies tend to spend more of their time and resources reviewing and creating forecasts than actually analyzing the information generated by those forecasts. But at the end of the day, it’s the output that counts and not the mechanics that made it happen. It’s important that you collaborate with your senior leaders and determine how they will use these rolling forecast reports to better handle their mid-cycle resourcing decisions. You will also have to integrate risk and opportunity assessments into your overall forecasting process. In addition, consider using scenario- and range-based forecasting to focus your attention on the key business decision drivers for each of your business units.

Look Towards the Future of Finance

Once application leaders have successfully addressed the current maturity of the abovementioned FP&A processes, they will be in a far better position to create effective roadmaps in terms of which upgrades ensure that they understand the questions your business partners will be asking in the future. As more and more analytics solutions are enabled by artificial intelligence and machine learning, finance will become an increasingly tech-oriented field.

Consero will provide insight and a robust financial solution that will help your finance teams get a clearer picture and make more informed business decisions, preparing you for this competitive landscape. Our ultimate goal is to help CFOs and CEOs make better decisions when it comes to the future growth and security of their organizations. Unlike traditional outsourced  bookkeeping and accounting, Consero provides FP&A support which includes an in-depth analysis and evaluation of your company’s financial position to better devise an effective growth trajectory.

Consero’s history as a successful growth strategy development partner relies on its Finance as a Service (FaaS) platform which includes a cloud-based software stack, aside from its in-depth understanding of finance, accounting, bookkeeping, market trends, and FP&A services. It also relies heavily on data-driven business intelligence and on a highly-customized, transparent, and unique approach towards business growth.


Consero FaaS: Disrupting the Outdated Traditional F&A Model

  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
  • or Consero Fractional CFO
  • Consero FaaS Enterprise F&A Software and Services

New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
  • Monthly financials available in 5-10 business days
  • Audit and diligence ready support details
  • Integrated enterprise grade accounting software
  • Budget and forecast reporting
  • Business KPIs
  • Efficient & scalable processes for rolling in add-ons