How does a highly effective finance team take control of complexity and fragmented information? They start by building common standards that help employees across the company integrate information in an efficient way to deliver a single version of the truth. Like many streamlined practices, the idea of common FP&A metrics seems simple—but simple isn’t necessarily easy.
If you’re struggling to create common definitions, here are a few key questions finance leaders can ask their teams that we highlighted in a recent webinar:
Integrate your infrastructure
When examining your company’s infrastructure, it’s imperative to ask whether one integrated system exists. If HR, research and development, marketing, sales, customer service, and other departments all store their metrics in separate Excel spreadsheets, the reporting process can quickly devolve into chaos.
In an integrated system, questions have straightforward answers. For example, “How many employees do we have?” is answered using a standard definition. High-performing companies have a single answer as to whether contractors and part-time employees are included, and thereby avoid the chaos that results when different people throughout the organization run metrics based on varying definitions of head count. The same philosophy applies to revenue—Is it gross revenue? Net revenue? What about credits? Similarly, companies need to know uniformly what happens when an executive with access to high-level information leaves the company. How quickly and easily is the access removed?
An integrated system centralizes metrics so the whole company makes decisions based on the same KPIs. This system ensures that information is accurate, timely, sustainable, and secure—and allows the FP&A team to better control the reporting process. As a result, analysis and modeling are easier, and decisions are ultimately better.
Examine your projects and process
According to the Adaptive Insights CFO Indicator Report Q2 2016, finance teams spend only about a fourth of their time doing high-level strategic analysis—and the remainder on clerical and administrative drudgery. Tedious manual data aggregation and double-checking spreadsheet cells prevent your team from digging into the strategic insights that your CEO is counting on. That’s a huge problem for your team—and for the whole company. Traditional Excel-based budgeting processes simply don’t cut it these days, as FP&A teams must slice through increasing reams of data quickly to gain actionable insights and drive the business forward.
Effective leaders, then, need to ask whether FP&A team members have the tools they need to do their jobs efficiently and effectively. This entails determining how many manual processes exist in your organization, both in the finance department and elsewhere. If your finance team is struggling through a manual close rather than an automated one, you need to think about how to update your process. The same applies to silos of information across other departments.
A great cloud-based system lets you integrate data from customer relationship management software, marketing software, and financial software into one customizable product. Then your team can generate seamless, effective reports packed with valuable insights that prime a company for continued growth.