28 February 2020 AnkitChadha

Financial Planning and Analysis: Everything You Need to Know

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Throughout business models and economies, the impact of digital transformation is visible. It is evident in almost all sizes and types of organizations. Thanks to digital transformation, new initiatives need to be established and guided forward that support shifting strategic goals.

Financial procedures are still done manually in organizations that don't yet use an organizational performance management system. The finance team also uses Excel spreadsheets for all tasks related to budgeting, planning, modelling and reporting. Later, it deals with organizational coordination. As a result, finance spends a great deal of time creating schedules and projections so that by the time the plans are finished, they are out of date.

 

What is Financial Planning & Analysis?

 

Every organization has a financial planning and analysis team who are responsible for supporting their business partners in achieving optimal financial performance. These are shown in metrics such as profitability, cash flow, return on capital, and economic value. Their duties incorporate the financial planning process and performing analytical decision support.

 

What Is the Role of Financial Planning and Analysis?

 

For any business, financial planning and analysis is the backbone of all its operations. That means drawing up detailed plans based on the specific financial goal helps the management to monitor, evaluate and prepare all the company's significant financial aspects. Financial planning requires an overview of the actual situation.

After evaluating the actual situation, the planner compares it to the target situation, which is based on specific financial objectives and contributes to an economic prediction. Based on this analysis, the financial planning of future revenues and expenditures is constructed. All goals and results that can be derived from the financial planning process are then recorded in a commercial concept and get executed for results.

 

How to Do Financial Planning and Analysis?

Financial Planning and analysis can be divided into these below-mentioned steps:

  1. Planning

Finance is typically involved in building an organization's strategic planning due to its proximity to financial data that drive planning decisions. This step of financial planning and analysis includes budgeting and forecasting.

  • Budgeting: Financial analysts are always involved in both building budgets in business units and support functions, as well as monitoring expenditure on an ongoing basis.

 

  • Forecasting: It is the step where the prediction of future financial performance is made based on external market variables (inflation, foreign exchange, economic growth and more). Business forecasts are crucial inputs into both budgets and strategic plans.
  1. Management Reporting

The creation and modernizing of management reports are one of the crucial parts of financial planning and analysis. It is a very time-consuming step within a finance organization and is thus a key driver of cost. Effective reporting enables fact-based timely decisions to get executed.

  1. Decision Support & Control

While there is no list of events that broadly defines decision support, it generally refers to financial analyses that are performed to offer guidance on business decisions such as pricing analysis, M&A analysis, activity-based costing and ad-hoc financial modelling.

  1. Specialized Experience

In-depth domain knowledge of financial planning and analysis helps you build a vision map for your organization's growth. These activities generally include specialized services such as actuarial analysis, risk management and specific classes of asset management, such as real estate.

 

Choose Experienced Financial Planning and Analysis Partners

Our professionals at TRC Corporate Consulting have extensive knowledge and experience in financial planning and analysis. We have catered to the corporate needs of many renowned companies and brands. Our ideology is to understand the needs of our clients and prioritize delivering innovative solutions. So, if you are looking for growth, having our robust financial planning and analysis team as a part of your business will lead to successful growth. Strong financial planning and analysis can be agile. Let us be your strategic contributor to your organization's success, creating a positive impact on its bottom line. For queries or understanding about our financial services, contact us!