Financial Planning: How to Strengthen Collaboration Between Finance and Operations

The Stakes of Enhanced Dialogue Between Finance and Operations 

Traditionally, financial planning is the prerogative of the finance department, which defines objectives and budgets in a top-down manner. Operations are then little involved in the process and may struggle to take ownership of objectives they did not help define. According to a 2021 Deloitte study, in 60% of companies, operations do not feel sufficiently involved in planning. 

Conversely, collaborative planning requires enhanced dialogue between finance and operations. The challenge is to compare visions, share constraints and opportunities, to arrive at forecasts that are both ambitious and realistic. It is also a way to hold operations accountable for their objectives and track their achievement over time. 

The Benefits of Stronger Collaboration 

Beyond financial performance, close collaboration between finance and operations has many advantages: 

• Better mutual understanding of the issues and constraints of each function 

• Greater agility and responsiveness to market changes 

• More relevant and effective resource allocation 

• Increased team motivation, involved in defining and monitoring objectives 
• A more comprehensive and consistent view of company performance 

Overcoming Obstacles 

Despite these proven benefits, finance-operations collaboration still faces several obstacles in mid-sized companies: 

• Siloed functions and lack of cross-functional communication 

• Difficulty sharing a common language and objectives 

• Time and energy required to sustain this collaboration on a daily basis 

• Lack of suitable tools and processes to support exchanges 

• Resistance to change and lack of team buy-in 

Aligning Visions Between Finance and Operations 

This dialogue must allow for true alignment of visions between finance and operations. This requires sharing a common language, around shared performance indicators and co-constructed objectives. 

Finance must make the effort to “translate” financial issues into operational terms, by explaining for example the impact of an increase in inventory on working capital or a production delay on turnover. For their part, operations must be able to quantify their action plans and anticipate their resource needs. 

Defining a Common Language and Objectives 

To align visions, it is essential to define a common language between finance and operations. This involves: 

• Explaining key financial concepts and indicators (EBITDA, working capital, cash flow, etc.) 

• “Translating” financial issues into concrete operational impacts 

• Defining a shared glossary, explaining the technical terms specific to each function 

It is also important to co-construct common objectives, aligned with the company’s strategy. These objectives must be: 

• Specific, Measurable, Achievable, Realistic and Time-bound (SMART) 

• Cascaded to each level of the organization, from the executive committee to operational teams 
• Accompanied by shared performance indicators, regularly monitored by all 

Sharing Constraints and Opportunities 

Aligning visions also means sharing the constraints and opportunities of each function. Finance must explain the cash flow, profitability, and compliance issues that frame the financial strategy. Operations must share the operational challenges, bottlenecks, and optimization opportunities that condition the achievement of objectives. 

This sharing allows for the construction of realistic financial forecasts, taking into account the realities on the ground. It also fosters the emergence of innovative solutions by comparing points of view and expertise. A 2020 Deloitte study reveals that 61% of companies consider sharing constraints and opportunities to be a key success factor for finance-operations collaboration. 

Organizational Approaches to Foster Finance-Operations Collaboration 

To foster this finance-operations collaboration, it is important to put in place appropriate organizational and governance methods. This can involve: 

Creating Finance-Operations Pairs 

Creating finance-operations pairs, jointly responsible for forecasts and their monitoring, is a powerful collaboration lever. Each pair combines a management controller and an operational manager, who work hand in hand throughout the planning process. 

According to a 2020 Deloitte study, 42% of companies have set up this type of pairing. The observed benefits are multiple: 

• Better mutual understanding of issues and constraints 

• Greater responsiveness to contingencies and opportunities 

• Increased accountability of operations for their forecasts 

• Closer and more regular performance monitoring 

Establishing Regular Steering Committees 

Establishing regular steering committees, involving general management, finance and operations, is another collaboration lever. These committees generally meet monthly or quarterly to: 

• Share the strategic vision and medium-term orientations 

• Validate objectives and financial forecasts 

• Monitor the progress of action plans and the achievement of objectives 

• Arbitrate any points of divergence or tension 

A 2021 KPMG study reveals that 65% of companies have such committees, which meet on average every month. They gain a more global and coherent vision of performance, as well as a better ability to make aligned decisions between finance and operations. 

Organizing Dedicated Workshops 

Organizing dedicated workshops to co-construct action plans and challenge forecasts is a third collaboration lever. These workshops generally bring together finance and operations teams for a day or half-day, around a specific agenda: 

• Sharing the issues and objectives of each function 

• Developing action plans and quantifying financial impacts 

• Challenging forecasts and alternative scenarios 

• Defining monitoring indicators and key milestones 

Designating “Champions” Within Operational Teams 

Designating “champions” within operational teams, responsible for liaising with finance, is a fourth collaboration lever. These champions are generally field managers, recognized for their expertise and leadership. They play a key role in: 

• Explaining financial issues and objectives to operational teams 

• Reporting field realities and optimization opportunities to finance 

• Facilitating the co-construction of action plans and monitoring of indicators 

• Facilitating change management and team buy-in 

The Contribution of Digital Tools to Facilitate Finance-Operations Collaboration 

To streamline and make exchanges between finance and operations more productive, it is essential to rely on appropriate digital tools. Collaborative financial planning solutions offer many advantages: 

Automating Data Collection and Consolidation 

Automating data collection and consolidation is a key first benefit of collaborative financial planning solutions. It improves reliability and productivity by avoiding manual re-entry and associated errors. 

Validation Workflows to Organize Exchanges 

Implementing validation workflows is a second benefit of collaborative financial planning solutions. These workflows make it possible to organize exchanges between finance and operations, by defining the key stages of the process and the roles of each person. 

Accessibility and Information Sharing 

Accessibility and information sharing are a third benefit of collaborative financial planning solutions. Thanks to ergonomic web interfaces and secure sharing functionalities, they allow everyone to access data and forecasts, wherever they are and at any time. 

Reporting and Data Visualization 

Reporting and data visualization are a fourth benefit of collaborative financial planning solutions. Thanks to interactive dashboards and advanced data visualization tools, they allow real-time monitoring of performance and analysis from different angles. 

Conclusion 

Finance-operations collaboration appears to be a major lever for performance and agility for mid-sized companies. It allows for more realistic and shared financial forecasts, aligning teams around common objectives and managing performance more responsively. 

But this collaboration cannot be decreed. It is built over time, relying on regular rituals, appropriate tools and new skills. The most mature companies in this area have implemented an average of 5 collaboration rituals per year, as shown by a 2020 McKinsey study. 

They have also developed “business partner” profiles, combining financial expertise and business knowledge. These profiles play a key role in linking finance and operations, and facilitating dialogue around performance issues. 

Talentia’s solutions, such as Talentia CPM, provide mid-sized companies with a collaborative platform to support this dynamic. Thanks to their advanced automation, workflow and reporting functionalities, they make planning a real tool for dialogue and management. 

By adopting these best practices and tools, mid-sized companies set themselves on the path to more mature and value-creating finance-operations collaboration. They give themselves the means to gain agility, performance and competitiveness in an increasingly uncertain and complex environment. 

It is a demanding path, which requires a strong commitment from management and a change in mentalities and skills. But it is also a path that brings progress and satisfaction for all stakeholders, as shown by the 2021 McKinsey study: companies that have implemented collaborative planning have seen their overall performance improve by an average of 20%. 

By betting on finance-operations collaboration, mid-sized companies give themselves the means to achieve their ambition: combining financial and operational performance, in the service of sustainable and shared growth.