How to Make Your Financial Planning a Performance Management Tool

Linking Strategic Objectives and Financial Forecasts 

Effective financial planning must start from the company’s strategic objectives. Whether it’s growth, profitability, innovation, or international development, these objectives must be translated into medium-term financial forecasts. According to a 2021 Deloitte study, only 38% of companies have a formalized process for translating their strategy into financial plans. 

This involves quantifying the expected impacts of the various growth levers (winning new customers, launching new products, etc.) and investments (R&D, marketing, recruitment, etc.). This is the key challenge in the dialogue between general management, finance, and operations, to ensure consistency between ambitions and means. A 2020 Accenture study shows that in companies where this dialogue is fluid, financial forecasts are considered 85% reliable, compared to only 45% in other companies. 

Defining and Monitoring the Right Performance Indicators 

To manage the company’s performance, it is essential to define relevant indicators that are aligned with strategic objectives. These indicators can be financial (revenue, margin, working capital, etc.), operational (customer service rate, production lead times, etc.), or even non-financial (customer satisfaction, carbon footprint, etc.). 

The challenge is to monitor these indicators in real time, to quickly identify deviations from forecasts and be able to react accordingly. This requires reliable data from the field and appropriate reporting tools that provide a concise, shared view of performance. A 2021 BPM Partners study reveals that 74% of companies with reporting tools integrated into their planning solution have improved their responsiveness. 

Gaining Agility and Responsiveness for Better Performance Management 

It is essential for mid-sized companies to gain agility and responsiveness. This requires more flexible planning, allowing forecasts to be adjusted based on market developments and the company’s actual performance. According to a 2020 study, 61% of companies feel that their planning process lacks flexibility. 

Rolling forecasts, which involve regularly updating forecasts over a rolling horizon, are an increasingly common practice. They reduce the “tunnel effect” of fixed annual budgets and enable more informed decision-making based on up-to-date information. A 2022 FSN study shows that companies practicing rolling forecasts have improved their forecast accuracy by an average of 30%. 

The Contribution of Digital Solutions for Performance Management 

To gain efficiency and responsiveness, mid-sized companies have every interest in relying on digital planning and performance management solutions. The benefits are many: 

• Automation of data collection and consolidation, to gain reliability and productivity. 

• Simulations and scenarios to test different options and facilitate decision making.  

• Reporting and data visualization for real-time performance monitoring. 

• Accessibility and information sharing, to foster collaboration between teams. According to a 2021 Forrester study, companies using collaborative planning solutions have increased their team engagement by an average of 25%. 

Conclusion 

By making financial planning a real performance management tool, mid-sized companies give themselves the means to achieve their ambitions. It is a key lever for aligning teams around common objectives, making informed decisions and continuously adapting to market developments. The figures speak for themselves: according to a 2021 McKinsey study, companies that have implemented an integrated and digitized planning process have seen their operational performance improve by an average of 20%. 

Talentia Software’s solutions, such as Talentia CPM, provide mid-sized companies with a unified platform for planning, budgeting, consolidating and analyzing their performance. Thanks to process automation, powerful analysis and intuitive user experience, they allow finance departments to fully play their role as business partners. “With Talentia CPM, we have considerably improved our visibility on performance and our ability to make quick and relevant decisions. It is an essential tool to support our growth,” says Sandrine Duval, CFO of the Nowak Group, an office design specialist.