Let’s be honest, operators are being pulled in more directions than ever in order to keep up with rapidly changing labor and operating environments. No matter the size or industry, the same threads are playing out globally as we transition to the post-pandemic era of wide-spread uncertainty.  

An FP&A process for your business

As labor and materials become more expensive, organizations everywhere are turning to software solutions to drive efficiencies across the enterprise, from the management of a remote workforce, to the automation of customer interaction, to procurement, to project management, to data & analytics, and so on. Thankfully, market forces have created an abundance of powerful tools available to companies at every size and have made them affordable. 

Unlike many other software solutions that are built to increase productivity and profitability in certain parts of a business, the financial planning process is the only function that holds performance across the entire organization accountable. 

Most companies in this environment, ourselves included, are constantly pushing and pulling, testing and refining, investing and cost cutting. But driving efficiencies in one function of your business might not result in increased long term sustainability, or may drive inefficiencies in other functions of your business. 

The key is that organizations use the financial planning process to inform and develop their goals, based on the pendulum of factors influencing the business environment. It then establishes the “track limits” to which a company measures its performance to ensure it finishes the race, ideally on top of the podium. 

Is it difficult to establish a framework?

For the casually informed, the process of implementing and using a cloud-based financial planning software can seem daunting. Lengthy setup times, confusing configurations/ data mapping, unfamiliar user experiences, and questionable accuracy and validity.

It really shouldn’t be that way. Implementation should be the most insightful and energizing step in the process. Immediately interacting with your financial data in a new way, identifying important trends, understanding how your metrics compare to your industry, and visualizing the “what’s possible” should be both fun and insightful.  

As we see it, there is a hierarchy of planning needs that range from passive to active. Passive users often take the set it and forget it budgeting approach, while active users regularly update their forecasts, create ongoing scenarios, track performance against plans for each revenue and expense type, collaborate with their teams on progress and use it as the basis for management reviews and decisions. 

In reality, even though every company should be doing the latter, which approach you take is typically dictated by the firm’s internal and external pressures on performance. For some business owners, simply having the peace of mind that things are on track is enough. Others have specific cash flow issues to solve, resources to allocate, growth targets to achieve, and need a roadmap on how to get there and a way to measure the progress. 

If those things aren’t valuable exercises for your business to work through, we recommend at the very least getting started with FP&A process: 

  • Go through an annual budgeting process. Take inventory of what worked and what didn’t work in the previous year, and decide on either a top-down or bottom-up approach and if monthly, quarterly, or simply annual projections are best. Note: Clockwork supports either methodology.
  • Determine your tolerance bands for making revisions to your forecast, either at the account level or group level. I.e. if revenue underperforms or over performs by +/- 10%, adjust forecast accordingly, or if certain expenses are +5% above plan, understand what options the company has to make adjustments in the following period.
  • Watch monthly cash flow / burn, understand where your cash levels are trending and look for opportunities to smooth large projected swings in cash flow. 

The growth mindset

So yes, it’s quite easy to put your FP&A process on autopilot. We don’t agree with doing the bare minimum, but it can still be valuable, especially for companies without large finance teams. 

In the end, having a growth mindset and a willingness to stay on top of your numbers throughout the year are what will make the year a success for your organization. Lack of resources are no longer acceptable excuses given the democratization of software solutions that do 80% of the heavy lifting.  

Pairing this mindset with good data and planning will make you substantially more confident in your decision making, we guarantee you that.  


To learn more about how Clockwork helps small businesses realize and work towards a better financial future, create your account to start a free 14-day trial (no credit card required). Connect your QuickBooks Online or Xero account to create your first financial model in minutes.

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