Is the finance function fulfilling its potential when it comes to contributing to business success through planning, budgeting and forecasting? A recent study into the priorities, challenges and ambitions of finance professionals, commissioned by software and services provider Advanced, has uncovered vulnerability in the CFO armour, yet finance directors can quickly regain ground by leveraging technology to their advantage.
The key concerns
The survey of approximately 955 senior finance professionals worldwide revealed that greater simulation or scenario planning is the top priority for CFOs when it comes to enhancing the planning process. Engaging with more non-finance stakeholders in planning, budgeting and forecasting (PBF), and shifting to rolling forecasts were ranked as second and third priorities, followed by more sophisticated analytical techniques.
However, CFOs ranked non-financial data capture as their lowest priority, despite the potential of the data to improve the accuracy of business forecasts and enable companies to adapt quickly to changing environments.
Andrew Hicks, Chief Financial Officer of Advanced said: “The survey results raise some interesting questions. Why are CFOs not maximising the business data available to them, and how can they become more connected across the business? Organisations are crying out for all departments to be connected and for information to be passed seamlessly along, allowing them to develop new products, services and strategies – yet many are not confident this could realistically exist.
“The technology available to organisations today can make, and is making, this a reality. Forward-thinking CFOs are ideally positioned to lead these changes.”
Prioritising non-financial data
The study found that CFOs who make better use of non-financial data are more than 1.7 times more likely to forecast earnings within plus or minus 5%. In addition, they were two times more likely to be able to forecast beyond the 12-month time horizon, and two and a half times more likely to be able to respond to market change.
“Traditionally, the CFO has been regarded as a financial gatekeeper of business, responsible for fiscal planning, forecasting and record keeping, and ideally providing a link between the everyday operations of the accounting department and the board of directors,” said Hicks.
“But CFOs are now also presented with analytics tools and big data, which gives them a unique opportunity to establish themselves as digital pioneers, business enablers and key strategic advisers. Simply put, technology can give the connected CFO greater information and power that can benefit the overall business and keep them one step ahead with this competitive advantage,” Hicks added.