The pragmatic financial planner

This article is sponsored by Jedox. Jedox is the world's most adaptable planning and performance management platform. They help companies succeed with integrated business planning (IBP). We'll be talking a lot more about planning when unveiling our latest eBook "The Planning & Forecasting Blueprint" together with Jedox on a webinar on 14 December. Join the 9 AM CET session here and the 4 PM CET session here.

Planning season is a busy season for most finance and FP&A professionals. In most companies, it’s because we have a budget to make and that can be a very daunting task. There are many reasons for this like having many departments give input, management having their own view on what the numbers should be, and inefficient processes.?

The worst part about the process is that as soon as it’s finished, we already know the numbers are going to be off, that there are many who don’t really feel accountable to the numbers, and that profitable projects won’t get funded because they didn’t make it into the budget.?

Still, most companies still swear to the budget process despite suitable alternatives being available. This blog is not about the alternatives though. It’s about how you can approach planning season and pass it with flying colors. All you need is a bit of pragmatism.?

It’s your 99% mindset that kills you

To be a bit blunt, there's actually nothing wrong with the process. It rather starts with us. It’s often the approach that we take that makes the process unbearable. Let me share an example.?

Years ago, I was involved in the quarterly forecasting process which would eventually become our budget for the year. I had just started working with a new group of stakeholders and one day in the middle of the process one of them approached me. Here’s what he said.?

“Anders, I just want you to know that when you do your controlling of the numbers there will be 3,000 units that the system cannot allocate probably”.?

I’m quickly making the math in my head. He was producing 500,000 units per year so it’s less than 1% of his total volume. Honestly, no one should care about such a small variance considering the whole thing will be inaccurate anyway. So, I tell him on the spot to forget about it, and if anyone gives him a hard time send them to me.?

No one ever came. Not to him and not to me. It wasn’t because he hadn’t tried to fix it together with the previous finance colleague who supported him. It just wasn’t that easy. Why is he coming to me in the first place though? It’s because someone in Finance has told him there can be no inaccuracies in the allocation of the units onto products. It had to be 100% correct.?

Stories like this are what’s dragging out the planning process and making you burn the midnight oil. Sure, it can be frustrating when management changes the assumptions but it happens every year so you can plan for it. Both practically in your timeline and process and mentally.?

Pragmatism wins the day?

As soon as you ditch the 99% mindset of needing to have everything correct and accurate you can start to design solutions that make the process feel like a breeze. Here’s what to consider along the lines of process, technology, people, and organization.?

• Process: When you know the numbers are going to be inaccurate as reality turns out differently you might as well design a simple and faster process. Quickly scramble some preliminary numbers and discuss with the main stakeholders involved. Present to management and get their guidance to finally present a comprehensive budget.
• Technology: You don’t need a rocket ship but rather you should prioritize tools that give you flexibility and are able to link data between various departments. In that way, you can build your preliminary numbers on drivers already provided by other departments. The tool should also be able to facilitate more detailed views and allow for easy follow-up vs. actuals.
• People: It’s imperative that you identify the main stakeholders involved in the process. No matter how pragmatic you are, you still need to ensure that these stakeholders are involved. Otherwise, you’ll easily find that no one feels accountable for the numbers that will be included in the budget.
• Organization: Planning shouldn’t be done in isolation by Finance. All relevant departments should be involved and be allowed to share their input. Their input will rarely be accepted at face value so it’s important that each department understands the process and the outcomes they can expect. Finally, ensure to continuously communicate how the process is progressing to ensure people don’t feel left out.

It's easy to get overwhelmed by a planning process if you design rigid timelines and input templates and mostly communicate via e-mail. However, if you take a more pragmatic approach as outlined here, you’ll be done faster, foster more accountability, and perhaps even have fun while the process is lasting. How is planning done in your company and are you taking a pragmatic approach?

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 11,000 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 305,000+ followers and more than 265,000 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.