Four tips for effective financial planning

Four tips for effective financial planning

Four tips for effective financial planning

Not getting the desired effect from your business, despite all of the time and energy you and your colleagues devote to the financial planning process – does that sound familiar? Do you feel that a disproportionately large amount of resources are used to complete a budgeting or forecasting process?

Financial planning that has an effect on the business is proactive. It supports decision-makers in good business governance. The planning process is an integral part of the work of decision-makers and is viewed as support ahead of upcoming decisions. It is frequently reviewed so that changed conditions can be incorporated into the plan. To achieve success with this, financial planning needs to run smoothly.

Mikael Winander, Solution Architect at Effectplan

Mikael explains that what is usually missing when trying to achieve effective financial planning is communication with any measures resulting from the analysis of and conclusions from planning work.


Here are four tips for you


  1. Driver-based planning – the right drivers with the right level of detail

Financial planning should take place primarily with a limited number of drivers. The factors that are really important for the business should be defined as drivers in the financial planning process. The right drivers with the right level of detail provide satisfactory forecasting precision with a focus on what is significant, which makes any discussion about decisions in the business much easier.


2. Decentralised planning with central control

Financial planning should be largely decentralised. Coordinators with good knowledge of the business should be operationally active in the planning process. They should be given the opportunity to plan the drivers identified, which are also important indicators for how the business is performing in each area of responsibility. It is, however, important in certain respects for central control to be retained. This is true, for example, of workflow and associated attestation structure, authorisation for templates and planning objects, and so on. Decentralised planning with central control retained brings ownership of planning closer to those responsible who are actually making decisions and implementing what is planned. It also guarantees good order in respect of version management and what has been approved in which body. There is also less risk of duplicate planning or something falling between two stools.


3. Dynamic planning

Financial planning needs to be able to take place on the planner’s terms. One part of the organisation needs to focus on customers or products, while another part of the organisation has projects as their primary area. Staff costs should be managed in a special way for all, but separated from other planning. Part of the organisation may need to work with a number of accounts, while the finance department needs to be able to work with them all at a detailed level. New planning objects can also be added that were not previously known or in any pre-system. It needs to be possible to incorporate these into planning while the process is ongoing. Dynamic planning makes it easier for the planner and contributes to improved quality and accuracy in the forecasts.


4. Iterative planning

The planning process needs to take place iteratively in order to take dependencies into consideration. Changes in one respect can have a consequence in another. For example, increased sales can increase the demands on the delivery organisation. Difficulties in recruiting staff may make it necessary to re-prioritise projects. In order to capture this, analytical work needs to be carried out during the ongoing planning process. The analysis is discussed, its conclusions are communicated and any corrections can be included in the plan before the forecasting process is completed. Iterative planning means that planning has a relevant impact that is consistent in the different parts.


How effective financial planning works

Financial planning that is driver-based, decentralised, dynamic and iterative has good conditions to be proactive and consequently have a good impact on the business.

The planning process can become an integral part of the work of decision-makers and offers good support in driving the business forward. It is so simple that it can be repeated frequently, which means that changed conditions can be managed at an early stage.

How can we help you with your financial planning?

With a really good tool for budgeting and forecasting, you can guide the company towards defined goals and also identify those parts of the organisation where there is potential for improvement and, possibly, new business opportunities.


Contact us and we’ll help you to get started!


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