FP&A teams spend way too little time in value-adding activities. In fact a survey from the online FP&A resource community FP&A Trends found that only 12.5% of organizations spend 40% of their time in value-adding activities.
While these numbers are concerning, the real problem lies in the fact that organizations either believe that they are doing far more business partnering and value-adding activities than they really are, or they believe that there is not much that can be done to improve the rigid finance system. In reality there is a lot that can be done. Gemma Davie, Associate Director of Performance (FP&A) at Compare The Market, gave five great tips for FP&A employees of all levels to improve their time spent on value-adding activities.
1) Challenge the status quo
As a first step, Davie’s finance team conducted a study showing where and how they spend their time. The results were surprising for everyone. Their finance team was spending 25% of their overall time exclusively on weekly forecasting. And at the same time, data shows that teams are no more accurate when forecasting weekly.
Right off the bat, Davie and her team found an area with actionable insight. Coming to the CFO and management with concrete data about a way to save time is every manager’s dream.
Presenting a problem, solution, and plan of action with data to back it up, all came from thinking slightly outside the box. By switching to bi-weekly forecasting, Davie and her team freed up 10% of the forecasting time for other things such as business partnering.
Although it is hard to challenge the status quo, (it could be that the company has been doing weekly forecasting for years and well before you even joined), sometimes the problems and solutions are right in front of us and all we have to do is take a step back.
2) Identify where the problems lie
Taking time to understand where time is being wasted sounds counterintuitive, but it is well worth it in the long run. Despite some pushback from the team, Davie and the finance team conducted a 4-week trial that aimed to identify where and how they were spending their time.
Although every company likes to believe that they spend a lot of time on business partnering and collaboration, in reality it might be much less than they think. Davie’s team at Compare the Market was no different and after the 4 week trial, they figured out that they spend less than 15% of their time on business partnering.
Once again, the fact that the study is data driven makes it easier to identify the problem in a conclusive way and then take action from it. In this case too much time was being spent on weekly forecasting (as identified above) and PowerPoint churn.
3) PPP- Prioritize partnering & preparation
Many finance professionals prioritize either partnering or preparation, but to get the best results, you need to do both. Davie found that her partnering aspect was very strong, as her calendar was constantly full of meetings, but there was barely any time for thinking or preparation.
She began to block time off for both partner preparation and personal thinking time. This gave enough time to focus on what she wanted to get out of the business partner meetings – who needs to do what, which action needs to be taken, and how teams can support each other.
No less importantly, blocking time off for herself also helped her come prepared and confident. Taking an extra 20 minutes a day to do that, helped save lots of time and effort in the long run.
4) Invest in yourself
Skills and technologies are constantly changing in today’s fast paced business environment and in a very short period of time, many finance employees find their processes to be inefficient. Whether it be due to organizational changes inside the company, market trends, or changing technology, finance needs to stay ahead of the game.
Davie argues that investing in yourself is no less important than the company investing in updated technology or skills. And this doesn’t necessarily mean investing in your job by learning new Excel functions or taking additional FP&A courses.
For her it was podcasts, and she became much more self-aware, confident, and effective on a personal and team level. And most importantly, it doesn’t take away from traditional office hours, as podcasts can be listened to during the commute to work, on walks, or while doing household chores.
Some people need to work on time management, while others want to improve communication and leadership skills. Some want to expand their professional capabilities while others just want to invest in a hobby that makes them happier. At the end of the day, it doesn’t really matter what aspect of yourself you are investing in, as the main thing is not to stay in the same place professionally or personally.
5) Get down to the action plan
The point of FP&A is to create a plan of action, not just to crunch numbers. But finance teams spend too much time on collecting and creating the perfect data and tend to forget that there needs to be a story and action plan behind it.
Davie suggests using the RAG method for breaking down and highlighting the actionable aspects of the data. The “R” is highlighted in red and is the “what”. This is the simple data and facts – what finance teams tend to spend most of their time on.
The “A” is amber highlighted in yellow and describes the “why” – Why the company did or did not hit their goals or the reason why the data is a certain way. Oftentimes, the “why” isn’t put on paper and is left to management and the audience to decipher for themselves which is a big mistake because it doesn’t lead the company to one or two concrete plans of action.
The “G” is highlighted in green and is the action plan, the most commonly overlooked part. Once you have the data and the why, an action plan should be S.M.A.R.T. Specific, Measurable, Achievable, Relevant, and Time-Bound. Most importantly, it should involve all of the departments and stakeholders and shouldn’t be left up in the air for each person to interpret how they want to.
By using different colors, it is obvious when you are presenting too much data with no reason or action behind it, because it is highlighted in red. On the other hand a balanced level of red, yellow, and green will help the company get on the same page with a clear understanding and plan of action.
The RAG method is a great place to start, as it highlights how much of the data is being presented without a reason or action behind it, but using finance tools such as FP&A solutions is a more permanent and efficient solution to this problem. FP&A tools help companies consolidate the data (the green part that takes up too much time) and allows for more drill down analysis that helps the finance teams get to the why and the action plan.