How do you communicate and collaborate with your team on creating financial scenarios?

2 Choose your tools and methods

Next, you need to choose the tools and methods that suit your needs and preferences. There are different ways to create financial scenarios and projections, such as using spreadsheets, software, or models. Each option has its advantages and disadvantages, depending on the complexity, flexibility, and accuracy you require. For example, spreadsheets are easy to use and customize, but they can be prone to errors and difficult to maintain. Software can offer more features and automation, but they can be costly and require training. Models can provide more structure and consistency, but they can be time-consuming and hard to modify.

3 Create your base case and alternative scenarios

Once you have your tools and methods, you can start creating your base case and alternative scenarios. Your base case is the most likely or expected outcome, based on your current assumptions and data. Your alternative scenarios are the variations that reflect different possibilities or uncertainties, such as best case, worst case, or what-if scenarios. You can use different techniques to create your alternative scenarios, such as sensitivity analysis, scenario analysis, or Monte Carlo simulation. The number and type of scenarios you create depend on your objectives and scope.

4 Update and validate your scenarios and projections

After you create your scenarios and projections, you need to update and validate them regularly. This means that you need to monitor the actual performance and compare it with your projections, adjust your assumptions and inputs as new information becomes available, and check the accuracy and reliability of your calculations and outputs. Updating and validating your scenarios and projections will help you keep them relevant, realistic, and reliable.

5 Communicate and collaborate with your team

One of the most important aspects of creating financial scenarios and projections is communicating and collaborating with your team. You need to share your assumptions, methods, and results with your team members, solicit their feedback and input, and resolve any discrepancies or conflicts. You also need to coordinate with other departments or functions that are involved or affected by your scenarios and projections, such as sales, operations, or accounting. Communicating and collaborating with your team will help you ensure consistency, accuracy, and alignment across your organization.

6 Present and report your scenarios and projections

Finally, you need to present and report your scenarios and projections to your stakeholders, such as senior management, board of directors, or investors. You need to prepare clear and concise reports or presentations that highlight the key findings, insights, and recommendations from your analysis. You also need to explain the assumptions, methods, and limitations of your scenarios and projections, and how they support your strategic goals and decisions. Presenting and reporting your scenarios and projections will help you demonstrate your value, credibility, and professionalism as a corporate FP&A professional.