Why financial planning and analysis should be automated

Humans are creatures of habit — even if it’s to our detriment. Financial planners and data analysis across companies and industries depend on manual spreadsheets to manage their financial reporting systems. Despite the fact that spreadsheets are messy, cumbersome, time consuming, and susceptible to human error. Here’s why financial planning and analysis (FP&A) should be automated.


IT management professor Raymond Panko has written prolifically on human error in spreadsheets, reporting that they are prevalent in approximately 88% of Excel spreadsheet formulas. This risk only increases as spreadsheets become larger and more complex, and as more people contribute to them, some of whom might not be sufficiently literate either from a financial or IT perspective.


If your business relies on Excel, you have to ask yourself: Can you trust your spreadsheets? Can you rely on them for accurate budgeting? For financial forecasts and to produce reports? Is there not an alternative you could use to measure financial performance?


Fortunately, yes, there is an alternative. Automation is the answer — indeed, it’s the future of FP&A.

Why financial planning and analysis matters

Financial planning and analysis is critical to the successful running of any enterprise. This ongoing process delivers insight into your cash flow, working capital, and debt-to-equity ratio, helping you to understand whether you can afford to pay your team’s salaries from month to month and stock your product lines, or whether your business is sufficiently robust to cope with the ever-changing dynamics in the market.


Given current economic circumstances, with both the UK and the world facing rising rates of inflation and the increased risk of recession, the importance of this insight cannot be overstated.


Only by accurately forecasting your financial situation holistically can your financial planning and analysis teams plan effectively, anticipate your margins, avoid pitfalls, identify opportunities, and grow your business strategically.

Excel spreadsheet hell

There’s no doubting the enormous power and influence of Excel. It’s become one of the most common tools in businesses ranging from small start-ups to large multinational corporates. And while it can certainly organise and manage data, and model it in useful tables, charts and diagrams, the platform is not without its limitations.


Part of the problem is that spreadsheets seem to multiply organically. What starts off as two or three spreadsheets inevitably becomes 20 or 30 overnight — or 50 or 60. And while the senior management team is updating one version of one spreadsheet, the human resources team might be making changes to another version of the same. Which, then, is the most up to date? Which is accurate? Version control and collaboration trouble abound.


And this probably touches on the most significant issue in Excel spreadsheet hell: Excel spreadsheets fail to deliver a definitive version of the truth.


If you’re a chief financial officer, financial director or financial planner, it’s this that you require more than anything else — a single, accurate perspective that gives you all the insight you need into your company’s overall financial health. Only with this information can you make the planning and analysis decisions that will ensure your business’s long-term sustainability and success.


Habit, perhaps, is one of the largest reasons why companies retain their loyalty to Excel, even in light of these persistent frustrations and pain points. In our personal and professional lives alike, we can be innately resistant to change. “This is how it’s always been done,” we shrug. “It’s what we know.”


But it doesn’t have to be this way. Whether you’re operating in retail, hospitality, finance, manufacturing, or any other industry, it’s possible to make the financial planning and analysis processes simple, streamlined and accurate. You can even do it while still holding onto Excel. Here’s how.

The future of Financial Planning and Analysis 

The future of financial planning and analysis lies in automation, and in combining artificial intelligence with human insights so that you gain all of the benefits, but none of the shortcomings, of both.


While this may sound unfamiliar, complicated and daunting if Excel has been your modus operandi since the very beginnings of your business, the good news is that automated FP&A solutions don’t exist to the exclusion of Excel. In fact, some of the best solutions, such as Jedox, integrate seamlessly with this and other spreadsheet platforms. They allow you to use Excel in the front end, but power this data through automated back-end processes that are efficient, collaborative, insightful and accurate.


The result is a solution that allows you to insert actual figures, compare them to your budgets and forecasts, make ad hoc adjustments based on changes in circumstance, and analyse future implications — all in one space and in real time. You can also syphon off relevant pieces of data for specific departments, while still maintaining all the internal links necessary to ensure consistency.


All of this means that your planning and forecasting financial analysts are likely to spend less time managing the process of drawing up spreadsheets and punching in data. Instead, with FP&A data running smoothly and error-free in the background, they can focus their attention and energy on building and developing their business strategically.


If you’re stuck in spreadsheets, you’re likely finding it difficult to add value at the same time. But if your only responsibility is to interpret data you know to be accurate, then adding impactful and measurable value comes easily.


Jedox also provides detailed reports that offer useful insight into your FP&A processes and the status of your business. Use this information to assess the health of your balance sheet, to act quickly on issues that arise, and to capitalise on opportunities that present themselves. Having a holistic view of your financial situation can drive quick and effective decision-making, and can be the difference between success and failure.


The transition is easier than you might imagine. For more information on how Jedox can help your business, contact Tahola’s Jedox experts today.