How to use the planning and forecasting bible

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In a time where the only constant is change, we need to change up planning and forecasting. FP&A professionals are always striving to improve and to share best practices, and these ten commandments are the top examples of best practices that were contributed by this fantastic community.

These concepts and guidelines are not prescriptive but a goal in themselves. In the same way that our work draws together a route map toward the business goal, these can be seen as milestones toward a new paradigm of planning and forecasting excellence.

Review the ten commandments and consider where you are in relation to each of them. What is the first thing that you would improve in your own processes?

The Ten Commandments of Planning & Forecasting

1. Planning should always be aligned with strategy. A successful plan balances all the moving parts of the business to support the strategic vision. Don’t take your eyes off the goal on the far horizon, or the business will lose its direction.
2. Documenting your assumptions is the most important part of planning. What would have to be true for the plan to be a good plan? How will these initial assumptions change over time, and can they be tested and refined?
3. Without an effective feedback loop, your plan will fail. The goal of the business is not to execute the plan as given. The goal is to reach key milestones in the best way possible, and effective feedback allows a timely response to barriers and opportunities.
4. Blow up your budget process! Blending target setting, forecasting and resource allocation in the same process is a recipe for disaster. Define the goal, work out the route map, and then identify what you need to make the journey.
5. Accuracy should never be the goal. A budget is not an attempt to predict the future, but a highly detailed navigation and operations manual for a journey into the unknown.
6. The planning department is not the whole company - but the whole company better be planning. This is a collaborative and cross-functional process, and the more involved every unit can be, the more they will own the plan.
7. A simple plan is the best way to achieve your target. Complexity increases the risk of error, obfuscates key targets, prevents effective responses to change, and reduces trust in the plan itself.
8. Re-forecasting your financials should never take more than a week. Identify the critical drivers behind the headline figures and be ready to flex and divert to a new route towards the corporate goal.
9. Never plan without preparing multiple scenarios. The Plan will never come true. Multiple scenarios provide realistic and actionable alternatives to stay on track.
10. Great planners always plan with contingencies. You’re ready for the worst, but do you have the resource liquidity to grab new opportunities as they arise?

Where now?

What is the first thing that you want to change to bring one of these ten commandments to life? What needs to be in place to do this?

Good communication, trust, mutual respect, and a seat earned at the decision-making table make the planning and forecasting process a collaborative, cross-functional, and comprehensive process. In short, it all comes down to effective business partnering. By building relationships of trust and the foundation for responsiveness in the face of change, we can help steer our businesses to new heights of strategic success.

Have you already incorporated some or all of these principles into your own planning and forecasting processes? We’d love to hear about your experiences and any other commandments that you think should be added to the ten above.

This was the twelfth and final article in my new series about the Ten Commandments of planning and forecasting. You can read the previous articles below.

The ten commandments of planning and forecasting

Why planning should always be aligned with strategy

Why documenting your assumptions is the most important part of planning

Without an effective feedback loop, your strategy and plan will fail

Why you should blow up your budget process

Accuracy should never be the goal of forecasting

The planning department is not the whole company - but the whole company better be planning

A simple plan is the best way to achieve your target

Re-forecasting your financials should never take more than a week

Never plan without multiple scenarios

Great planners always plan with contingencies

While you await future articles why not read my previous series "Charting the course for a successful career in FP&A"? You can find all the articles below.

Charting the course for a successful FP&A career

FP&A basics for finance professionals

From financial analyst to CFO

A day in the life of a financial analyst

The challenging life of an FP&A leader

The FP&A professionals' career plan

Why FP&A professionals need to be curious

Why FP&A professionals need to take more risks in their careers

Can't help falling in love FP&A

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box”?where you set the ambition for your transformation. You should join the?Finance Business Partner Forum,?which is part of the Business Partnering Institute's online community.

Can we trust the machine for financial planning and analysis??(the last article in my series "Planning (as we know it) is dead".

The secret sauce of FP&A transformation?(the last article in the series "FP&A Transformation Talks")

How Finance should use its seat at the table?(the last article in the series "The Unfair Advantage of Finance")

The ultimate guide to decision-making for finance professionals?(the last article in a series about the decision-making process and how Finance should impact it).

The Mindset Change Checklist For Finance Professionals?(the last article in a series about the mindset change that finance and accounting professionals should make to become business partners)

It's Time To Decide If You Want To Be A Business Partner?(the last article in a series about the personality traits of business partners)

All Successful Business Partners Are "Leaders"?(the last article in the series about our new capability model)

Should We Keep Talking About Business Partnering??(part of a 17-article series where we deep-dive into the WHY, WHAT, and HOW of business partnering by putting it on a formula)

Your Journey To Successful Business Partnering Explained

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset?(part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business?(part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation??(part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight?(part of a case study series where I interview business partners about how they drive value creation using real cases)

The Future Of FP&A: Two Ways To Take The Reins

What Is The Accounting Profession Paradox?

What Defines A Finance Master?

The New Career Path For Finance Professionals

How Finance People Can Be More Successful

The CFOs Roadmap To Transforming Finance

How To Become A Finance Business Partner

Financial Analyst vs. Finance Business Partner

Finance Business Partner Is A Bullshit Job

How Business Partners Keep A Plan On Track

Anders Liu-Lindberg?is the co-founder and a partner at?Business Partnering Institute?and the owner of the largest?group dedicated to Finance Business Partnering?on LinkedIn with more than 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a?long-time Finance Blogger?on LinkedIn with 110,000+ followers and 195,000+ subscribers to my blog. I am also an advisory board member at?Born Capital?where I help identify and grow the next big thing in?#CFOTech.?Finally, I'm a member of the board of directors at?PACE - Profitability Analytics Center of Excellence?where I support the development of new analytics frameworks that can improve profitability in companies around the world.