CFO Journal: How to Act in the Face of Uncertainty

“Until recently, business leaders could assume that the immediate future would bear enough resemblance to the recent past that they could construct sturdy forecasts out of the data, assumptions, and real-world experience they’d been accumulating. Relying on continuity from past events, however, has always been a specious practice, especially in fast-moving industries, and can be existentially dangerous today.”

Read More at The Wall Street Journal >

CFO Magazine: 2022 Outlook: CFOs’ 4 Realms of Risk

“Corralling all the data required to get better at planning and forecasting and timely decision-making will not be a piece of cake. A Harvard Business Review Analytic Services study found that many finance teams struggle with accurately preparing, reconciling, and accessing high volumes of information; integrating recent or real-time data into analyses; and analyzing data, forming recommendations, and communicating them.”

Read More at CFO Magazine >

FP&A Trends: Caution: Forecast Accuracy is Seasonal Too!

“The benefits of measuring seasonality of accuracy are that users can plan high/low scenarios for each prediction based on the season-specific range of possibilities.  Departments can adjust how much capacity, safety stock, or cash reserves are needed based on their own worst case.  And it’s easier to determine missing factors for model improvement when you focus on adding predictors to the high noise areas of the model.”

Read More at FP&A Trends >

FP&A Trends: Best Practices in Implementing the Rolling Forecast

“The main criticism of the traditional budget is that it does not react to what is actually happening in the business during the year. But a Rolling Forecast solves that problem, helping companies to continuously plan (forecast) over a set time horizon.”

Read More at FP&A Trends >

CFO Journal: Financial Reporting Considerations: Forecasts and Inflation

“Inflation, as well as supply chain disruptions and labor shortages, are affecting an increasing number of companies in different industries to varying degrees. And if a company’s business model and operations are affected, it’s likely that its accounting and financial reporting will be as well.”

Read More at The Wall Street Journal >

FP&A Trends: Rolling Forecasts: The Important Role of Technology

“Year-end forecasts help to make the decisions required to achieve annual goals. However, they can be relatively inflexible. Due to the time needed for preparation, they are also based on data that may be halfway up to date when creating the forecast but quickly become outdated during the fiscal year. This is where introducing Rolling Forecasts is particularly valuable for organisations in industries and markets with high volatility.”

Read More at FP&A Trends >

CFO Journal: 2025 Finance Predictions: The Pandemic Effect

“As real-time information moves closer to reality, and business analysis grows increasingly automated, finance will likely bolster its efficiency by offloading some responsibilities to captive locations, centers of excellence, and outsourcing vendors—all of which may be held to a higher standard. Lower costs can enable the function to invest in work that is building enterprise value.”

Read More at The Wall Street Journal >

CFO Dive: Business Forecasters See Inflation Heating Up to 5.1%

“In an estimate released after a two-day meeting on Wednesday, Fed officials forecast that so-called core inflation will rise 2.3% next year, slightly above the 2.2% estimate by the NABE panel.”

Read More at CFO Dive >

Institute of Management Accountants: Overcoming FP&A’s Biggest Challenge: Predicting the Future

The Institute of Management Accountants released a report that “is designed to serve as a guide for organizations trying to forecast what’s ahead in their markets”. It poses and expands on these 9 ways to improve forecasting in the future:

1. Expand the data available
2. Tools: Start small and add on
3. Use scenario planning
4. Address the knowing-doing gap
5. Model Building: Think causality
6. Establish data collection systems
7. Improve assumptions and estimates
8. Monitor results and quickly identify the business reasons behind variance
9. Improve analytical skills

Read More at Institute of Management Accountants >