The opening of the Moscow FP&A Club in the centre of the Russian capital provided an opportunity for the senior FP&A professionals gathered at the event to hear about the latest trends in financial planning and analysis and the new FP&A certification from the Association For Financial Professionals (AFP).
Participants came from different industries and included chief financial officers (CFOs), finance directors and senior FP&A professionals, all of whom were keen to learn about how data mining and analysis techniques could aid the traditional financial planning process and to share best practice fundamentals and tips.
Larysa Melnychuk, founder of the FP&A Club, started the evening with an overview of the aims of the Club to engender a truly supportive professional networking group for FP&A professionals and provided an overview of the latest trends impacting the sector, explaining that in the current uncertain financial environment ‘black swans’ and ‘perfect storms’ are not unheard of. FP&A becomes much more important than before in this environment, and it is clear that financial planning and analysis needs to change in order to adjust to this ‘new normal’ business world where regulations and fast-moving trades are having an increasing impact. FP&A can help firms by becoming a more useful and value-adding function to the business.
FP&A processes have to become more flexible and dynamic, in order to allow for quick responses to business changes. As the result, traditional scheduled planning is moving towards an ‘on-demand’ model, and rolling forecasts are expanding time horizons and improving decision-making processes. Scenario planning, risk-adjusted planning and flexible budgeting are becoming the de facto best practice for finance professionals and FP&A is playing a crucial role on this trend. The fact that 36 people subsequently expressed an interest in joining a second iteration of the Moscow FP&A Club next year, suggests a keen interest in this subject matter.
FP&A and Technology
Modern FP&A systems should be based on key business drivers and advanced analytics. System ‘black boxes’ should be avoided. A new generation of cloud-based technological solutions will allow FP&A professionals to maintain their own models in the future, without heavy reliance on expensive programmers and IT departments.
Modern FP&A systems allow for the following functionalities:
- They can detect trends like seasonality and automatically adjust forecasts.
- Automatically select the appropriate forecasting technique based upon relevant data.
- Create forecasts at a country level and apply it to the lowest level of details.
- Detect and correct data that falls outside of confidence level.
- Change results based on internal business rules.
The new generation of FP&A professionals, in Moscow and elsewhere, should combine a lot of knowledge and skills including analytical and communication skills to offer valuable information to the business. An ability to see the big picture and to play a business partnership role is essential.
Highly performing FP&A teams will be multifunctional, combining highly analytical business finance skills with a knowledge of business intelligence (BI) tools, risk management practices and data science. These skills are not easy to find, or acquire, which is why the AFP’s FP&A certification was also mentioned at the event.
Business culture needs to change as well: traditional budgeting, planning and forecasting culture cannot support a lot of current business practices effectively so a change is coming. The ‘beyond budgeting’ philosophy is interesting to many FP&A professionals and finance professionals and is increasingly attractive because it can provide more than just bottom-line information. Many organisations are not, however, ready to abandon the standard budget just yet. A culture change is required to support the move towards dynamic budgeting and more flexibility in the planning and forecasting process is essential if the FP&A function is to become more strategic and influential.
FP&A professionals need a place where they can meet, exchange ideas, network and plan how to support this culture change. The FP&A Club is one way of doing it. The mission of Moscow FP&A Club, in common with other chapters around the world, is to deliver greater clarity and consistency in what is meant by ‘FP&A best practice’.
The key aim is to improve:
- Short-term business performance.
- Mid-term business strategy.
In my opinion, this will be delivered by increasing the influence of FP&A professionals within organisations, with the help of bodies such as the FP&A Club.
Improving the quality of FP&A skills, information and professionals available to organisations is the key aim and will be supported by listening to non-vendor best practice speakers in a not-for-profit environment, which also acts as a networking body, where future presentations can be democratically selected. I am already looking forward to the second meeting of the Moscow FP&A Club next year and to reporting back on our findings.
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