Integrated Planning

According to a recent survey from the Association for Financial Professionals, three-quarters of FP&A practitioners are questioning the accuracy of their data. The survey—which polled more than 600 FP&A professionals across 20 industries—examines how finance teams are responding to the COVID-19 pandemic and its impact on their organizations. When asked to identify the business challenges brought on by the crisis, 75% of respondents said “information uncertainty.” As economic conditions continue to evolve, finance teams are faced with having to frequently change their plans and adjust to unfamiliar scenarios in order to help their businesses navigate the road ahead. But without access to accurate, reliable, up-to-date information, finance leaders can’t empower key stakeholders with the insights they need to make agile, educated business decisions—making it tough for them to plan confidently for today and tomorrow.  Finance-led business planning needs to be a proactive, forward-thinking process, which makes managing information uncertainty all the more important during periods of unprecedented change. With the right planning tools at their disposal, FP&A teams can achieve a holistic and accurate view of company-wide data and test their business plans against any number of potential scenarios in real time—and then use those findings to help stakeholders across the business make data-driven planning decisions going forward.  There are finance-led planning platforms, for example, that include built-in functionality for automated data consolidation, integrated workflows, audit trails and proactive cash management. With that level of access to reliable and accurate financial data, FP&A professionals can manage information uncertainty and enable agile business planning across the entire organization. With the right tools and the right planning processes in place, finance teams can tackle the future head-on and lead their companies forward with confidence—using reliable, up-to-date data to guide their most important decisions. Learn how Vena Agile Planning can streamline your finance-led business planning processes and alleviate information uncertainty so you can plan confidently for today and tomorrow. Read AFP’s COVID-19 report here.

Recent changes in market conditions have placed unprecedented new planning demands on the strategic finance function. What used to be monthly or quarterly reporting and reforecasting is now needed on a weekly, if not daily basis. Fortunately, a combination of agile processes and readily available technologies can help you rise to these new demands. A long-time advocate of integrated business planning and tearing down departmental data silos, Vena CFO Darrell Cox knows how to put those tools and processes into action to plan with confidence for today and tomorrow.   Join Darrell as he shares his insights in the CPE-accredited, on-demand video, Plan for Today and Tomorrow, at PlanToGrow.com, a digital learning platform for business leaders and finance and operations professionals.  Over his nearly three-decade career in finance, one lesson Darrell learned repeatedly was how even the best business plans are going to be wrong at some point. And as he explains, more important than a plan itself is an underlying, agile planning process; one that’s guided by an organization’s objectives and designed to pivot  quickly to adapt to changes in market conditions or business performance.   “Having a plan is important, but having a planning process even more so. A well-functioning process will mitigate risks and keep your plan relevant so your business can transform through change.”  — Darrell Cox     Drawing on real-life examples, Darrell illustrates how agile planning processes have helped some of the world’s most recognized companies thrive, while others ignored the principles of agile planning at their peril. Hear how companies like Buick and Netflix are household names today not because they started with great plans, but precisely because agility and alignment were fundamental to their planning processes. Throughout his career, Darrell has also been a consistent innovator, always seeking out new tools, technologies and processes to enable more agile, finance-led planning—elevating the role of the finance function in the process. Discover the essential technologies and processes that should be at the top of the toolbox of any modern finance team, including: Adopting agile forecasting in place of the traditional static budget. Adjusting your reforecasting frequency depending on the need, from sales to cash flow. Using every new uncertainty as an opportunity for scenario modeling and reforecasting. Telling the full story behind your numbers by integrating financial and non-financial data sources. Treating integrated planning as an ongoing, iterative process of persistence. From agile forecasting to scenario modeling, from identifying KPIs to the CFO’s role as chief storytelling officer, learn what makes a successful plan and—again, more importantly—an effective planning process.  Watch Darrell’s presentation for additional key takeaways including: How to instill a continuous improvement, finance-led planning culture in the face of any business scenario. The value of recognizing and learning from feedback loops in your budgeting and forecasting processes from across the business. How and when to engage business managers for faster, data-driven decision making. The roles of scenario modeling, agile forecasting and an iterative mindset as best practices in times of uncertainty or otherwise. How the people, process and technologies behind your integrated planning are as important as the plan itself—which, at some point, is always going to be wrong. See Darrell’s full presentation on demand at PlanToGrow.com to learn more about the essential elements of planning for today and tomorrow.  Thought Leader Bio Darrell Cox: Chief Financial Officer, Vena Solutions Before becoming Vena’s CFO, Darrell Cox spent most of his career in FP&A, seeing what planning processes worked for some companies that thrived, and what proved costly for others. He has long advocated for agile, integrated business planning and tearing down data silos between finance and operations departments.   

According to recent survey data, mid-market CFOs are investing in new technology today to prepare for uncertainties tomorrow. The survey—conducted by the accounting firm BDO—polled 700 CFOs from mid-market companies in the U.S. When asked to identify their priorities for growth in 2020, 54% said digital transformation, more than any other response.  Finance and accounting departments are well-positioned to benefit from digital transformation, as 58% of CFOs said they’d increase spending on internal resources for that area. On top of that, 70% said they plan to increase their IT budgets this year, citing data management issues as well as reporting software and security challenges as the finance department’s biggest concerns. Digital Transformation Starts with a Flexible, Finance-Led Planning Platform In order to fulfill their roles as strategic partners to the business, finance teams need access to reliable, up-to-date data from every function of the business in real time. A holistic view of company-wide data gives forward-thinking finance leaders the ability to identify key business drivers, model future scenarios, respond quickly to change and plan for the future with confidence. This is achievable with the adoption of a planning platform that connects people, process and technology to create an ecosystem for integrated finance-led business planning. With the right tools and the right processes and the ability to collaborate effectively cross-functionally, finance leaders can hone in on the mission-critical data needed to drive well-informed and agile decision making across the business based on the story the numbers tell.  Here are some key features to keep in mind when assessing a planning platform to help you kickstart your finance team’s digital transformation: Planning tools with an Excel interface are more easily adoptable across your entire organization because they allow users inside and outside the office of finance to leverage a tool they already know how to use. By consolidating company-wide data within a centralized, easy-to-use platform, your finance team can tear down data silos, collaborate seamlessly with other departments and eliminate bottlenecks in the strategic planning process. Process automation helps finance teams boost efficiency, eliminate tedious manual processes and spend more time on what really matters—planning for the future of your business with forward-looking analysis.   With reliable data at their fingertips, finance leaders will always be able to keep a firm pulse on the key metrics needed to help their businesses confidently plan for today and tomorrow. But it all starts with embracing digital transformation to drive an integrated approach to finance-led planning processes—and that means making sure your teams have the right tools for the job. Learn how Vena Agile Planning can transform your business planning processes today so you can focus on strategic, data-driven growth. Read the BDO survey here.

Integrated planning requires open communication, cross-functional collaboration and alignment between stakeholders towards the same strategic goal. But if your culture doesn’t support teamwork, effective integrated planning will always seem like a challenge. There are few corporate leaders who understand this concept better than Debbie Lillitos. As Vena’s Chief Customer Officer, Debbie is responsible for the overall success of Vena’s customers, a role that requires her to collaborate every day with stakeholders across the business—from sales and marketing to services and customer support. We caught up with Debbie for a quick recap after her Vena Nation keynote to find out more about the important role company culture plays in facilitating a successful approach to integrated business planning. Here’s what she had to say: What does culture mean to you? For me, culture is a set of values and principles that guides behavior at an organization. Over the long term, these behaviors create norms and assumptions that influence how people communicate and treat each other. It’s also about how they treat their physical spaces, how they represent themselves, how they represent the brand and the personal policies that guide their professional interactions. It’s multifaceted for sure, but that’s how I think about culture. Here’s an example: At my last company, we’d just acquired this new customer in the U.K. and they flew me over to meet them. I remember being awestruck after stepping into their office because it was immediately apparent to me who they were and what their culture was all about. The energy in the office, the way everyone interacted with me and the general feeling of the place was all just so electric. They had these spaces that were dedicated to innovating new product offerings, and it became very clear that innovation and embracing change were a big part of their culture. It’s like a thread that runs through the fabric of the entire organization. How do you build a culture that supports innovation, collaboration and agility? It starts with a management philosophy that engages employees. You need to speak to people in a way that opens their hearts and minds, gives them the freedom to try new things and encourages them with the intrinsic motivation to succeed. You have to expect that people are going to show up and deliver, learn from each other and collaborate in a positive way. This creates a relationship that is predicated on trust. When you do that, you end up with a culture that is driven by innovation and one that’s far better equipped to embrace change. This is vital because there’s often some friction associated with change—and business planning in our world right now requires a lot of it.  If you’re trying to adapt your business within a culture that’s resistant to change, it’s just not going to work out very well. I do think that a corporate culture of innovation, agility and adaptation can be learned at an organization, but it starts with the tone that’s being set from the very top. When you say that culture can be learned, what do you mean by that? And how does it affect integrated planning? If you want your strategic plans to be supported by the entire organization, you need to give everyone the opportunity to contribute in a meaningful way. If people are able to recognize that collaboration is important and that their voices are being heard throughout the planning process, they’ll be much more motivated to participate because they understand the meaning behind their actions. All of this is a reflection of your culture, as well as the values guiding behavior that I mentioned earlier. When it comes to integrated planning, it’s important to foster that collaborative culture and to get cross-functional leaders to contribute. The first step is getting their attention and making the planning process visible. You need to find ways to cut through the noise at your organization and align every department’s actions toward the same strategic goal. The second step is about clearly articulating why that goal is important. People need to know how and why their actions have an impact. That has to come from the top down, but recognition also plays a part. There’s a lot of evidence out there suggesting that if people are recognized for their contributions, they’ll be more likely to repeat that action again. Over the lifetime of a company, that really translates into a high level of productivity and operational agility. Building a corporate culture that embraces change, aligns teams and promotes innovation is fundamental to operating an agile and resilient organization for both today and tomorrow. What role does technology play in the integrated planning process, and how is that reflective of culture? In order to tear down barriers and engage people on a personal level, you need to make integrated planning as easy as possible for your people. Even if you have their attention and they understand why it’s important, they won’t want to participate if it’s hard for them to do—like sending them an email with 17 attachments and asking them to do four things at once, for example. Technology is really important because it can help create a frictionless experience. It’s about simplifying the way you engage your people by providing them with the tools that make the planning process accessible. A cultural revolution takes place at companies that leverage the right technology, because eventually those tools redefine the way people work and become critical to the overall success of the business. I think Slack is a great example because if you were to rip that away, businesses wouldn’t be able to communicate as effectively as they do now. By introducing technologies that improve the end-user experience and ultimately help the business grow, engaging people to participate in the cross-functional planning process becomes much easier. What advice would you give to business leaders who are focused on improving their integrated planning processes? The technology must be as frictionless as possible, but you need to remember that technology is only half the story. The experience of your people also has to be the central focus of your business planning initiatives.  Culture is about creating an environment that encourages people to engage, collaborate and innovate. You can’t enable a successful integrated planning process without a strong culture. It’s like having a Ferrari, but not knowing how to drive it. Even if you have the best technology out there, it’s not going to be successful if you haven’t created an environment that engages and empowers your people every step of the way.  To hear more from Debbie, check out her Vena Nation keynote on demand—Culture is Critical to Integrated Planning. If you haven’t already, register now for your free All Access pass to Vena Nation today. 

Whether you’re strapped for cash, waiting for your cash cow or looking to cash in your chips, cash is a preoccupation for most of us, in good times and bad. For finance teams, though, managing cash flow is a critical part of the job—one that gets more urgent when planning quickly through times of change. When your business needs to suddenly shift gears—whether it’s because you’re in a position of rapid growth or entering into survival mode—your team’s day-to-day decision making changes dramatically too. Monthly cash forecasts can instead become a daily practice. And a focus on leveraging cash for growth may turn into one of maximizing cash management to stay afloat.  While this may be the new reality facing finance leaders, there are some proven cash management methods for planning through uncertain times.   What to Ask About Your Cash Detailed cash management, as part of the larger function of treasury management, is often focused on the nearer term, and is pivotal in survival days with expenses like payroll on the line. Agile cash management comes down to being able to answer three essential, daily questions:  1. How do I maximize my available cash? This includes cash in the bank and access to credit and other sources of short-term capital. As Deloitte advises, the first step to figuring out what’s best for you is cataloguing all of the sources of cash available to your company, including the following and beyond:  Equity funding  Unused committed and uncommitted lines of credit Proceeds from the sale of excess inventory, PP&E or other assets  Accelerated receivables and deferred payables  From there you can assess your qualifications for each and what information, processes and transparency you’ll need to share in order to access them. You may need to make some tough strategic and operational decisions as you do.  2. How can I accelerate receivables and defer payables? According to 2020 research from The Hackett Group, the largest 1,000 US companies have $1.3 trillion tied up in excess working capital, of which $368 billion is tied into accounts receivables. So how do you free up that capital and increase your liquidity? Some of the most common, customer-facing ways to accelerate your receivables include: Incentivizing customers with discounts for early payments or penalties for late ones Moving as many of your customers to online payments as possible, using financial lockboxes and automated clearing house (ACH) services for those who can’t Identifying at-risk customers and sending friendly, early reminders, flagging accounts in arrears and prompting additional actions as required Don’t forget to look at your own team and how you can embed a cash culture throughout your organization. Collecting receivables can be a team sport, so consider how changes in compensation plans can incentivize everyone involved—not just your collections lead, but also the sales rep and customer success and account managers involved in any given account. Account payables can be approached in a similar—but inverted—fashion, by reducing the amount of cash going out. The most effective approach, though, isn’t going to defer existing payables at all. Instead, it will minimize expenses incurred in the first place by identifying those expenses you need to retain and by introducing new policies that slow down those that aren’t so crucial.  3. How do I know I’m right with the tough calls I’m making? Strategic finance teams need to help business leaders pull the right levers and make the tough calls to keep the company running. Making sure those tough calls are the right ones is a function of having the best data at your fingertips, then analyzing that data to shape your recommendations—and ultimately your final decisions—around three basic cash indicators: Inflow: Examine your cash inflow, net of any costs incurred to make the product that you sell. This might mean looking at aging receivables, product usage data and churn potential from your CRM, GL and AR sub-ledgers to flag high-risk customers. It could also mean tapping into your CRM and marketing automation systems to measure the health of your sales pipeline. Tough calls range from minimizing customer support levels to determining which marketing campaigns to embrace and even which sales reps to let go.  Operations: Look at your expenses and outflow and the decisions you can make to limit the cash you’re spending. Operational expenses are where you’ll make your most difficult decisions—even at the expense of long-term gain—and how you’ll demonstrate your agility and understanding of which levers to pull in survival mode.  Engage business managers early to identify critical expenses, such as CRM and accounting software, that keep the business connected and running. Implement new policies and guardrails to slow or stop incurring expenses above a certain dollar amount, as well as new approval requirements for more control over discretionary spending. Require department heads to re-evaluate all planned spending to identify what can be deferred to the next quarter or fiscal year. Using data from your CRM and compensation sub-ledgers, you’ll need to make tough calls about headcount, sales and marketing spend, liquidating PP&E and freezing technology investments.  Time: To inform the decisions that you make, consider your inflow and operations over different outlooks of time—the next six weeks, six months, 12 months and two years, for example. This will help you understand how the decisions you’re making now will affect your business in the future. The decisions you need to make may seem difficult, but ultimately tough times require tough calls—as long as those calls are informed by frequent modeling and reforecasting, and are based on the best data you have. (Check out The Ultimate Guide to Budgeting and Forecasting to help you better formulate strategies, plan for the future and align your company's goals.) Learn more about how you can quickly get started with agile planning best practices for cash management, or talk to a Vena FP&A expert 1:1 with no obligation to help you plan for today and tomorrow.

“There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know … that tend to be the difficult ones.” So said former U.S. Secretary of Defense Donald Rumsfeld—and it’s as good a starting point as any for finance teams looking for a way to approach today’s uncertain times. You can model the impact of any conceivable scenario on your business—the things you know you know and the things you know you don’t know—but you can’t possibly plan for everything. As we’re all learning today, the “unknown unknowns” are indeed the difficult ones. But the most strategic finance teams embrace the need for agility no matter the market conditions. And the strength of agile forecasting is particularly apparent when faced with those “unknown unknowns.” Agile forecasting provides a chance to model future scenarios, learn from experience and close the feedback loop by analyzing the variances between your forecasted numbers and latest actuals. By helping to determine what caused those variances, it also sheds light on the course corrections you need to make to stay on plan. Planning Better—in the Moment and Beyond When the market changes unexpectedly, finance teams need to adapt quickly, consistently and intelligently. But most companies still see strategic planning and budgeting as an annual process—which makes it difficult to achieve agility, for multiple reasons:  Annual budgets anchor you to strategic planning goals set months earlier, in many cases outdated by the start of your fiscal year. Market conditions, competitors and internal business factors can change dramatically over the course of a year, sometimes from day to day.  Annual budgets give you a single feedback loop per year, the one chance to course correct and commit for another 12 months. In contrast, agile forecasting empowers you with a clearer understanding of what to analyze and where to act—while ensuring you have the models and data to make the best decisions possible at any given time. It’s why rolling forecasts, one type of agile forecasting, have long been identified as a finance best practice. While adoption remains far from widespread, research from technology analysts and associations such as Aberdeen, CIMA and the IMA have shown the value of this kind of forecasting in driving or promoting better: Finance capabilities: Holistic “what-if” analysis; drilling down from summary numbers to specific investments, campaigns, even individual transactions Business planning capabilities: Incorporating business drivers and KPIs in the planning process; identifying profitability at the unit, location, product and employee level Overall business performance: Increasing revenue growth by more than 40%; fostering greater cross-departmental collaboration  With agile forecasting, unlike annual budgets, you can look ahead from your current starting point, not months past—examining your business either on a rolling timeframe, a real-time basis or a traditional monthly or quarterly cadence, for a deep line-of-sight that takes into consideration the most current market and business conditions. That means, in periods of uncertainty, agile forecasting can help prepared finance teams adapt quickly to unexpected events and shifts in market conditions. Putting the Right Process in Place By exercising a finance muscle other companies simply aren’t using, agile forecasting gives finance teams an advantage—ensuring the best processes and practices are in place to anticipate and adapt to whatever uncertainty arises. With continued reforecasting iterations your finance team and business counterparts will embrace change with: Speed: Reforecasting, variance analysis, scenario modeling and other forecasting practices make it easier to react fast with a full set of best practices already in place. Transparency: By creating cross-functional trust, transparency empowers finance leaders to adjust and reallocate resources on the fly when times of uncertainty emerge.  Accuracy: Forecasts will naturally become more accurate with each iteration, as you hone into which drivers matter more than others and which metrics are beyond your control, then include them in your variance analysis process. Every reforecasting iteration is an opportunity to test against any number of changes in business or market conditions, including (but not limited to): Supply chain dependencies Interest and exchange rates Tariffs and trade agreements Liquidity, cash on hand and access to capital Customer needs and behavior Geopolitical factors  Getting Started with Agile Forecasting If implementing agile forecasting is a critical step to navigating these uncertain times, how you implement it is just as important. You can’t track everything all the time—identifying your key drivers and KPIs and the metrics you can best control, as well as the data you need to support them, is key, as is understanding how to time your forecasts to get the answers you need. Consider both: 1. How Often Should You Reforecast? Whether you reforecast on a quarterly, monthly, weekly, daily or real-time basis will depend on how your business operates and the resources you can draw from. While research from KPMG has found that the most common frequency for extending rolling forecasts is quarterly, you should pick what works best for your process. But it’s easy to shift gears—it’s all about agility, after all. You might choose a rolling forecast on a quarterly basis when times are good, then move to monthly when they’re more uncertain. Or you could opt to run your model on the fly when you experience a dramatic shift in business—the loss of a significant revenue stream, for instance. You may even choose to examine different business processes or KPIs on different schedules. Finding the right balance is key. Forecasting every process in real time can introduce monitoring and communication challenges, for example. But in uncertain times, specific processes or KPIs—revenue or cash, for instance—can benefit from that moment-by-moment attention. An agile forecasting process will allow you the dexterity to employ real-time forecasting in some cases and time-based forecasting in others—using whichever timeline works best for you.  2. What Are My Key Drivers and What Data Will Support Them? Key to agile forecasting is ensuring your internal stakeholders—starting with finance—have all the data they need to make quick, educated planning decisions.  That means looking beyond your accounting system and financials to get a holistic view of your entire business—both your key drivers and KPIs and the levers you can pull to adapt to changing conditions on the fly. And from a technology perspective, it means having readily available tools to add to those financial metrics to capture previously siloed data from across your business into a single system, including: Non-Financial Data: Including human resources information, sales data from a CRM and any other relevant data sources that influence the overall planning process. External Factors: Such as geopolitical risks, exchange rates for international business, economic trends and more. With the right data, your finance team will spend less time chasing down numbers and more time analyzing, correlating and extracting actionable insights from their forecasts. You’ll be able to use company-wide KPIs to identify new growth opportunities and make quick, difficult decisions when necessary.  Moving Forward—with Agility Agile forecasting isn’t a process that’s adopted overnight, especially during periods of uncertainty. But it all starts with the right drivers and data, as well as a timeline that will empower you to look ahead, identify trends and adjust accordingly. And with the right processes in place, you can start to identify and address those “unknown unknowns”—long before they take control of your business.  Learn more about how you can quickly get started with best practices for agile forecasting, or talk to an Vena FP&A expert 1:1, with no obligation, to help you plan for today and tomorrow.

Agile Scenario Modeling Mitigates Risk See how the decisions you make today will affect your bottom line tomorrow, with Vena. Unless you’re Nostradamus, there’s no predicting what the future holds: whether new market needs are about to put your company on an upwards trajectory, or a worldwide crisis will have you facing fresh uncertainties. In finance—as in life—change is the only constant. While there may be nothing you can do to keep the future—good or bad—at bay, you can make sure you have a plan ready when it arrives. By constantly testing your assumptions, you can equip your company with a strategy that lets you move forward confidently and with agility. That’s where scenario modeling comes in.  Strategic finance teams use scenario modeling as part of their daily, monthly or annual practice, keeping their finger on the pulse of future scenarios to ensure they know which levers they can pull to adjust course. But in times of uncertainty, it’s even more valuable. Whether you’re encountering seismic market shifts, entering a new geographic market or making changes to a line of business (LOB), scenario modeling can help you build agile models that allow you to assess the impact of your business plans on revenue, costs and cash flow.  Four best practices can help you get the most out of your scenario modeling efforts. 1 Draw on all kinds of data 2 Be selective in the variables you model 3 Hope for the best, plan for the worst 4 Use a break-even analysis 1. Draw on all kinds of data As a strategic finance team, you won’t be able to execute on agile planning with any degree of confidence without the right data, and that means going beyond the general ledger (GL). Having ready access to company-wide data will give you a holistic picture of your business today and better inputs, drivers, and outputs for the scenarios you model.  The right metrics bring together real-time, company-wide data from typically siloed systems, including: Sales volume data from your CRM: What were booked sales from your last reporting period? What’s the likelihood of active accounts converting to sales in the upcoming period? Pipeline health from your marketing automation system: What’s working to keep the pipeline full and what’s not? What marketing campaigns or channels should you discontinue or double down on? Headcount data from your HRIS:  What are the business implications of your hiring practices in general and for certain roles or types of roles? Which roles lend themselves to remote working vs. onsite requirements? How long does it take to hire and onboard key roles? Historical data and your most recent actuals from your GL: Are there correlations in the historical data? What does analyzing variances between actuals and forecasts from your most recent reporting period tell you? Ultimately, effective scenario modeling under any condition means linking business drivers to key performance indicators (KPIs), monitoring those KPIs and being able to factor in external modeling inputs. That means combining traditional financial metrics with non-financial data (from sales, marketing, HR and operations) as well as external data from public sources (e.g., tariffs and exchange rates). 2. Be selective in the variables you model As with your budgeting process or dashboard reporting, effective scenario modeling should be based on a select number of levers and performance indicators.  Identify your levers from all of the metrics at your disposal. Then start with the plan, and execute with the budget or forecast. When making decisions about financing, operational changes and more, consider your values and strategic priorities. Then work to remodel your KPIs, business assumptions and expected business performance accordingly. For scenario modeling, select a manageable number of levers to model. As much as possible, you want to make choices that are either within your control (levers) and then predict a variable range of outcomes with confidence.  Given the challenges facing businesses today, the most common levers to test against your business model are: Sales volume: Anticipating a period of extreme growth or slowdown to continue for at least another quarter, what are your revised forecasts going forward? How can you change compensation plans (e.g., commissions vs. bonuses) to keep up with or maintain your salesforce headcount while sticking to your business performance and customer delivery targets? Headcount: The most obvious lever to push or pull in times of uncertainty is headcount. How will you change your hiring plans to stay on target (or close to it) to meet your strategic goals and priorities? What roles can you defer or outsource to weather a cash crunch? Which roles should you add no matter the scenario?  Cash on hand: By leveraging existing models and logic for analysis and variance reporting, you can decide what adjustments you need to make around cash flow. How likely is it that interest rates and available credit will affect your ability to continue executing on your plan? How can you accelerate your strategies to accommodate? If needed, what financing steps can you take—whether that means additional debt or equity investors—to make sure your business is fully funded to weather the uncertainties ahead?  3. Hope for the best, plan for the worst (and the best too) For each variable you want to model you should consider three basic scenarios: high, low and medium, the latter referring to continuing business as usual.  The trick to coming up with those scenarios is to make them very different. Make the high scenario a true, blue sky best case—your business is firing on all cylinders. Conversely, the low scenario should mean your business is facing significant challenges. The medium scenario should be something in between: business continuing along the planned status quo, without any drastic market changes.  To illustrate the high, medium and low scenarios against the levers most likely to be top of mind for today’s finance teams, consider the following examples: High: Based on sales accelerating, and demand spiking—perhaps due to sudden changes in the market. It’s a positive use case, but one that can add strain to a company in its own unique ways, perhaps requiring added headcount and/or additional resources to keep up. Medium: Assumes sales continue to grow based on your last period’s actuals. This scenario shows how the last period’s sales figures compare to forecasts, and what headcount and other decisions are needed to maintain your current trajectory.  Low: Where revenues or costs are challenging and the only planning option involves revisiting your business model across fixed and variable expense structures in addition to revenue streams.  4. Use a break-even analysis Do this to show what’s needed from each variable to keep it performing as is. There’s no shortage of tools and decision-making models available to you and your finance team in times of uncertainty, but the simplest method of determining your financial health in any situation is a breakeven analysis. Whether you use Excel or a more advanced FP&A solution, breakeven analysis identifies what decisions you need to make to continue operating at a cash flow break-even level, including: What’s the minimum sales volume you need to continue operating as a company? What changes can you make to sales compensation plans (e.g., adjusting commissions and bonuses) to keep operating on a break-even basis? For SaaS companies, what do reduced sales and usage rates mean to your variable expense structure (e.g., commissions, infrastructure, etc.)? When time is of the essence, breakeven analysis is a way to confront hard truths about the feasibility of a product line or business. (Check out The Ultimate Guide to Corporate Budgeting to help you better put finance at the heart of everything your company hopes to achieve.) Scenario Modeling in Action While scenario modeling may not give you the power to predict the future, it will empower you with a plan to face that future head on, and inform the solutions you develop for good times and bad. Ultimately, in a mature FP&A process, scenario modeling can help fuel your strategic portfolio planning, and give you a sense of the investments or innovations you should embrace—and which you shouldn’t—to build towards your business goals. It can also play a part in identifying your company’s key drivers and areas where you need to improve measurement. How you use scenario modeling at your company will depend on the maturity of your financial team and the tools you have in your toolset, as well as your people, process and company culture. But wherever you sit on that spectrum, scenario modeling has the power to help you put your company on the best track—no matter the future ahead.  Learn more about how you can quickly get started with best practices for scenario modeling or talk to an Vena FP&A expert 1:1.

Agile Scenario Modeling Mitigates Risk See how the decisions you make today will affect your bottom line tomorrow, with Vena. Learn how finance leaders can continue business planning with agility and confidence, even in the face of change How can you factor current market conditions into our future plan? What can you do to plan for the next 60 days? How can you help your business adapt to today’s changes while better preparing for tomorrow? If you’re part of a finance team navigating through change—good or bad, expected or unexpected—chances are you’ve already asked yourself one or more of these questions. As you look towards the future of your business, there are likely even more tough questions to come. To truly drive strategy and navigate wisely, though, you need more than just questions. You have to be able to access the insights and information that let you answer those questions with foresight and confidence. This means having the right practices and processes in place, as well as the people, tools and data to keep them running smoothly. It all starts with a business continuity plan that includes other processes that will let you build agility into your finance functions, revise your financial and operational plans quickly and move forward with flexibility and confidence. All to give you the power to react to what’s happening today while navigating a path for tomorrow. To get you on your way, consider three best practices for agile finance-led business planning. 1 Seize Opportunities for Scenario Modeling 2 Consider Your Cash Flow 3 Adopt Agile Forecasting 4 Change Through People, Process and Technology 1. Seize Opportunities for Scenario Modeling Scenario modeling allows you to test your assumptions and build a more robust future plan. It also arms you with the insights you need to make tough decisions quickly and confidently. It turns every uncertainty you face into an opportunity to dive deeper into your numbers and estimate future outcomes, allowing you to hone in on critical metrics and their impact on your business results. Doing it well means picking the right variables and business drivers to test and combining key performance indicators (KPIs) from across your business to see the direct implications of adjustments to those variables. For finance teams experiencing seismic market shifts, large-scale projects or other market or organizational change, scenario modeling can be particularly powerful. It allows you to envision the future and to navigate wisely through those changes. Teams may choose to test operational steps to weather cash crunches, such as headcount planning, to answer the following questions: How sustainable is cash flow of the business if we stick to our existing hiring plans? What are the implications of a complete hiring freeze on cash flow and operations? What key roles or types of roles—e.g., executive hires or roles that work well remotely—can we maintain without adversely affecting our cash flow situation? How can we adjust compensation plans fairly to lengthen our financial runway? What other hiring plan changes can we make to maximize performance while minimizing cash flow implications? Even when change isn’t a factor, strategic finance leaders will often make scenario modeling a matter of practice. By testing the implications of their business plans against assumptions regarding existing and future scenarios, they can create agile models to assess the impact of those plans on factors such as revenue, costs and cash flow. 2. Consider Your Cash Flow Every finance team is directly responsible for ensuring that a  business has enough cash on hand to weather a period of change. Whether that means taking on additional debt or putting a hold on new hires, they often need to make tough decisions to keep the business operating no matter what’s happening around them. In periods of change, especially, effective treasury and cash management are the difference between moving forward or falling behind. This means scenario modeling around cash flow is a natural priority. But there are other important things to consider as well, including: Assessing your cash flow on a more frequent basis: Monthly cash flow statements don’t always cut it when you need to understand immediate impacts. In times of change, many finance teams choose to assess their treasury situation on a weekly basis, if not more frequently. Examining all the levers at your disposal: To ensure your business is sufficiently funded, you’ll want to consider assessing your access to additional credit, changing  your accounts payable procedures or making potential major decisions around hiring and headcount. Providing management with dashboards, data and other visibility measures: This means involving all the necessary departments (e.g. HR in the case of headcount decisions) so that they’re part of the decision-making process and appreciate the role cross-functional collaboration plays in the overall success of your business. 3. Adopt Agile Forecasting To be flexible to change, finance teams need to be able to identify key performance trends as necessary and modify their plans quickly based on an analysis of how those changes will influence their bottom line. That’s where agile forecasting comes in. Better budgeting and forecasting with Vena Discover how Vena’s budgeting and forecasting software can take your planning cycle to the next level. Unlike static annual budgets—which are tedious, manual and rendered obsolete the moment a change is made—agile forecasting doesn’t relegate reforecasting frequency to quarters or months, but reforecasts on demand. In doing so, it gives finance leaders a reliable prediction of long-term business results based on real-time actuals and drivers. Even under the most predictable conditions, agile forecasting gives strategic finance teams the power to identify new growth opportunities for their business. And when faced with market or organizational change, it’s among the best ways to adapt quickly, consistently and intelligently. To get started with agile forecasting: Use historical data as well as your most recent actuals to guide reforecasting. Reforecast at a frequency that makes the most sense for the purpose at hand. Quarterly may suffice for large operational expense items, but in times of change, a weekly cadence for cash flow and headcount may be more suitable. Use scenario modeling to visualize the impacts of decisions you need to make today on tomorrow. Facilitating Change Through a Foundation of People, Process and Technology Introducing new practices like these isn’t always easy. Integrating them into your organization requires a foundation of people, process and technology to build a culture and flow that keeps your business moving forward—in times of change and not. You probably already have some of your company’s most analytical minds on your finance team. The right tools and data will help them drive smart, agile planning decisions across the business. A few things to look for include: Data integration: You’ll need a way to combine financial and non-financial data (internal and external) into a single system that stakeholders can easily access for a full view of the business and the levers that can be pulled to pivot quickly. Data visualization: To navigate forward intelligently, you need a way to turn data into insights and to present those insights to management in a way they can easily understand and quickly put into action. A familiar interface: Your team has a better chance of succeeding if they have the flexibility to focus on quick modeling and analysis in a platform they know, rather than having to learn a completely new software package. Working together, these capabilities make the processes above—scenario modeling, agile forecasting and cash management—systemic and scalable. They also help enable integrated business planning with easier cross-functional collaboration and data discovery. Let your data become your direction Vena breaks down planning silos across the organization and empowers you to turn numbers into narratives. And it’s through that combination of process and technology that finance teams can begin to: Involve business managers early and often throughout the planning process, collaborate on high-level KPIs and departmental budget numbers and ensure core business strategies remain a north star in the planning efforts. Give business managers visibility into processes, for transparency and to demonstrate the direct impact of planning decisions on their business units. Easily assign team members to work alongside business partners, rotating them across departments for a first-hand perspective on company-wide operations. As part of an organization’s integrated planning efforts, the finance team should have a big picture view of your entire business—and the ability to drill down to see how a change in one decision can have cascading impacts across other areas of the company. These best practices offer that—empowering finance teams to navigate all types of change. Learn more about how you can quickly get started with more best practices, or talk to an Vena FP&A expert 1:1

FP&A software powering your plan to grow Drive smarter, more data-driven business decisions with numbers you can trust. Every company can benefit from a corporate performance management (CPM) strategy, but it’s especially useful for those that want to modernize their financial planning and make more data-driven decisions for maximum future performance. Corporate performance management (CPM) refers to software systems that increase efficiencies and data accuracy in finance and accounting processes, enabling companies to measure and analyze their past performance to make better business decisions that maximize future performance—both in bottom line financials and operational KPIs. Software systems that measure and analyze financial data in order to inform strategic decisions go by several names—including business performance management (BPM) and enterprise performance management (EPM)—but in general, these terms are synonymous with CPM. New enhancements in cloud financial solutions have bridged the gap between applications that merely process and track transactions, and those that manage the full spectrum of financial planning and analysis (FP&A). CPM has merged with FP&A, allowing finance teams to not only monitor and manage their companies’ past and present performance, but also to plan for future performance improvements using insights and analysis from both financial and operational data. What is CPM Software? CPM software is a set of tools and processes that include reporting, planning, budgeting and analysis. An organization’s CPM output is the first step towards facilitating revenue growth and managing expenses. As the industry pivots from CPM to incorporating FP&A practices into every area of the business, the associated software has evolved as well. Modern FP&A software incorporates these key CPM functions, providing more power and more opportunity to organizations that embrace full-spectrum FP&A. Traditionally, CPM software has been segmented into: Financial CPM: accounting processes, namely financial close management including closing the books, consolidations, account reconciliations and preparation of financial statements/financial reporting Strategic CPM: finance processes, namely budgeting, planning and forecasting, i.e., the traditional definition of FP&A Until recently, these were typically sold to different audiences with different value propositions: Accounting (Financial CPM): increase efficiency of close process and accuracy of financial statements and reporting Finance (Strategic CPM): increase budgeting, forecasting accuracy and efficiency, and elevate the strategic role of finance in business-wide planning The evolution from segmentation to “full-spectrum” FP&A is due to the fact that the two sides of CPM are symbiotic: modern finance leaders should look at FP&A as an all-encompassing term for measuring, managing and reporting on their company’s past, present and future performance. Actuals from accounting need to feed into budgets, forecasts and analysis to inform better business decisions for the best future performance possible. The key differentiator between traditional CPM and full-spectrum FP&A is integrated business planning. Modern FP&A solutions and processes combine financial and non-financial data and KPIs to inform better departmental and business-wide decisions for the best future performance. Here’s a look at each of the key areas of performance management—what they are and how they’ve evolved. For an in depth comparison of CPM software solutions, check out the 2020 vendor landscape from analyst firm Nucleus Research. CPM and FP&A by Process Financial Close and Consolidation Definition: The financial close and consolidation process provides actual numbers for organizations to analyze against planned numbers. Full-spectrum solution: Modern software automates the financial close process—this means having to enter less data manually, which results in increased accuracy and more time for analysis. FP&A solutions also carry out a streamlined and automated consolidation process with in-depth audit logs and operations-based workflow. Reporting Definition: Reports include cash flow, income statements, balance sheets and other important business metrics, as well as regulatory reports like CCAR and 10Ks. Full-spectrum solution: Software enables self-serve reporting, so businesses can build summary reports with easily accessible details using a familiar Excel interface, without help from IT or a vendor consultant. Budgeting, Planning and Forecasting Definition: Planning outlines a business’ course of financial direction, while budgeting records how the plan will be followed each month. Budgeting also includes debt reduction, cash flow and revenue estimates. Forecasting uses market conditions, business drivers and historical data to predict a company’s financial outcome in the upcoming days/weeks/months and years. Full-spectrum solution: Full-spectrum software combines financial and non-financial data to inform management on the best business-wide planning decisions—budgets may be financial, but plans are cross-departmental. Modern software solutions also allow teams to implement a rolling forecast model of regularly updated forecasts, which leads to continuous improvement and increased forecasting accuracy with every iteration. Modeling and Analysis Definition: Modeling uses data to create projected scenarios of how financial processes may be affected by various market and internal events, and analysis is the process of evaluating the data that comes from these models. Full-spectrum solution: Modern software solutions use information from multiple sources such as accounting, business operations and finance to test models that predict how operational decisions might affect a company’s financial future. See how Saint Mary's University approved budgets 70% faster. CPM and Excel While ERP modules and specialized CPM software abound, Excel still remains the most popular software tool for performing CPM, and it makes sense—it’s intuitive, familiar and everywhere in business, especially in finance and accounting departments. It’s only natural that Excel is the software users gravitate towards for any financial analysis or reporting need. Excel is built with flexibility at the forefront, so users don’t need help from IT consultants to build budget reports or perform data analysis. At the same time, it has a powerful interface that includes hundreds of functions for data visualization and statistical analysis. Finance and accounting professionals have relied on Excel for their entire careers, and it remains a highly-sought skill among candidates. Plus, countless companies have invested in training employees and building customized Excel models, templates and report formats. In fact, Excel is so popular that if it was a language, it would be one of the world’s largest, with nearly a billion speakers. To Excel or Not to Excel Organizations rely on Excel for its power, flexibility, and because they know it inside and out. But it’s not perfect. Weaknesses include a lack of: Underlying database Integration with company-wide databases and software Version control, audit trail, permissions, and other security controls Workflow automation Anytime, anywhere, any device access Drill-down reports Status tracking User-level permissions Excel Imitators Many CPM software vendors are convincing their customers to abandon Excel-based approaches in favor of their proprietary emulations. These solutions are similar to Excel, but lack its flexibility and power, and require a long, continual and costly process of customizations to make the software fit the company’s unique needs. What’s more, 84% of companies that buy proprietary CPM software to replace Excel end up exporting their data back to Excel anyway. Why? Because accounting and finance professionals prefer its flexibility and familiarity. But exporting back to Excel defeats the purpose of a secure, controlled program in the first place. It also perpetuates the problem of “shadow systems,” additional software being used outside of company-approved solutions. In this scenario, you’re back at square one—facing the same challenges as using Excel on its own. Integration: The Best of Both Worlds The solution to this dilemma? Integrate advanced features with Excel’s flexible interface. By combining Excel’s familiar interface—not just emulating the look and feel, but real, actual Excel—with a cloud-based solution, organizations can fix inefficiencies without compromising the power of a tool they’re already familiar with. Excel integration is more than just deploying an “Excel-like” solution—integration combines the powerful functions of the original software with the benefits of a modern, scalable cloud solution. Learn how to add workflow, audit and version control to Excel in this series of free financial technology webinars! The Future of CPM BPM Partners’ Next Generation of CPM report explains that the next generation of performance management solutions will have four core characteristics: Comprehensive: A comprehensive program will go beyond the office of finance to deliver a holistic viewpoint of an organization. It allows senior management to understand the effects of new decisions on different parts of an organization. Connected: When the number of CPM software users in each department grows, there’s a need for more systems to be connected. This way, finance departments can get the bigger picture: operational trends, market changes, sales and product development – not just revenue. Collaborative: Innovative CPM designs will make it easier for users to share reports and data, turning business planning into a collaborative process. Executive management can share data and reports to move ahead with different goals. Cloud: Cloud-based CPM solutions can enhance scalability and accessibility while providing better security than on-site software. Focus on Usability In addition to the four characteristics above, advanced CPM applications must focus on providing usability – not only to finance professionals, but especially to users without a finance background. In order for enterprise software to realize its value, it must be adopted by employees. Ease of use, or “employee-centered” design, is the first step toward better performance: The value chain for an optimal CPM solution starts with increased usability. Usability leads to quick adoption, and quicker adoption means the finance departments can see quicker time-to-value. By getting everyone on board more efficiently and generating ROI earlier, word’s going to spread – and that means more recognition for the department who led the charge, easier buy-in from decision makers, and, ultimately, better decisions and business performance. “CPM isn’t just for accountants anymore. We’re seeing broader use throughout organizations which in turn is leading to greater adoption rates. This is making usability an important factor in current and future development trends. The end goal here is to achieve greater efficiency with analytics integration, more effectively empowering end-users.” – Nucleus Research Full-spectrum FP&A Full-spectrum FP&A software incorporates all the competencies of CPM to deliver a diverse spectrum of effective features. From financial close and scenario modeling to improving planning strategies for future business performance, FP&A solutions deliver reliable data and instant access to forecasted numbers. With a user-friendly cloud-based FP&A solution, finance teams don’t need to rely on vendors or IT consultants to get the most out of their software—they’ve got self-serve dashboards and drill-down reports to quickly get the information they need, and share it with others across the organization. Full-spectrum FP&A is the logical next step of CPM, giving finance teams clarity and confidence in their numbers with a centralized single source of truth, with automation that frees up time for analysis. Executives and members of senior management can make better decisions when they have real-time data at their fingertips – and that’s better for everyone. See why full-spectrum FP&A is the ultimate corporate performance management solution with a personalized demo.