How to Make Your Financial Planning More Agile and Responsive

The Limits of Traditional Planning Approaches

A 2020 study by Deloitte reveals that 60% of companies find their financial planning process too long and too detailed.

Traditionally, financial planning is an annual exercise, frozen in time. Objectives and resources are defined at the beginning of the year, with little real possibility for adjustment along the way. This approach lacks flexibility and doesn’t allow for quickly adapting to market changes or unforeseen events.

Moreover, planning is often the prerogative of finance departments, with limited involvement from operations. This creates a disconnect between financial forecasts and on-the-ground realities, undermining the relevance of and buy-in for set objectives.

Towards Agile and Collaborative Financial Planning Models

To address these challenges, new approaches to agile financial planning are emerging, including:

Rolling Forecasts

Rather than a fixed annual forecast, this is a rolling 12-18 month process, regularly updated. This allows adjusting forecasts based on market evolutions and the company’s actual performance.

Scenario Planning

This involves developing different scenarios based on varied assumptions (market growth, cost evolution, etc.). This approach promotes agility and informed decision-making by anticipating different situations.

Collaborative Planning

A 2022 BPM Partners study reveals that 79% of companies consider collaboration between finance and operations as a key success factor for agile financial planning.

This aims to closely involve operations in the process, establishing an ongoing dialogue with finance. Exchanges are facilitated by digital tools allowing real-time information sharing.

The Benefits of Agile Financial Planning for Mid-Sized Companies

Adopting these new agile financial planning approaches offers many advantages for mid-sized companies:

• Better responsiveness to market changes, thanks to continuously updated forecasts.
• More relevant resource allocation, based on reliable data and probable scenarios.
• Stronger operational buy-in for objectives, thanks to their involvement in the process.
• Easier performance management, with adapted indicators monitored in real time.

Feedback and Best Practices

Many mid-sized companies have already made the switch to these new agile financial planning approaches, with positive results. Feedback shows that adopting rolling forecasts and increasing operational involvement in planning leads to better visibility and agility. Companies generally see a significant reduction in planning cycle time and an ability to adjust financial forecasts much faster than before.

Similarly, implementing collaborative planning solutions significantly improves dialogue between finance and operations. Companies that have taken the plunge report a shared vision of objectives and action plans, greatly facilitating performance management.

Some best practices for successful agile financial planning include:

• The importance of strong sponsorship from top management to drive change.
• The need to support teams through training and adapted change management.
• The value of leveraging proven digital solutions, like those offered by Talentia Software, to automate processes and foster collaboration.

By adopting agile and collaborative financial planning approaches, mid-sized companies give themselves the means to more effectively and responsively manage their performance. It’s a key lever for seizing growth opportunities and ensuring competitiveness in a complex environment. The numbers prove it: according to a 2021 BPM Partners study, companies that modernized their planning process saw revenue growth of 15% on average.

Talentia’s solutions allow anchoring these new approaches in companies’ daily operations. Through process automation, facilitated information sharing and simulation features, they help mid-sized companies gain agility and performance.