Proper financial management is the core of efficient, successful business operations. By utilizing integrated budgeting and planning strategies, organizations are able to respond quickly to change, pinpoint performance gaps, gather clear insight into new objectives, view impactful performance targets and contingency plans, foster improved communication with stakeholders, and capture a holistic view of their key business functions. All of these strategies help in the management of performance, which leads to greater ROI and profits.
When assessing financial performance management, there are five specific indicators that highlight organizational deficiencies and the lack of planning tools and protocols, which severely hinder financial performance:
Reliance on Spreadsheets
As technology advances and business processes become more streamlined, the reliance on spreadsheets for planning and performance management can create miscommunication that will lead to inaccuracies and errors. The manual component of this task is cumbersome and does not offer structure, security or control of business modeling processes, operation tactics and financial target alignment, or complex business analytics. This hinders interdepartmental collaboration, workflow and adoption across the organization.
Incomplete View of Business Drivers
Companies who do not have a comprehensive understanding of the key metrics that steer their profits suffer in producing reliable forecasts and plans which hinders growth and profitability.
Data in Disarray
The data used at any level should have protocols for proper management and organization. Many companies do not have a centralized system and process in place to input and extract data to analyze and prepare reports, which provides an unclear picture of the company’s performance. Without a streamlined system in place, cross-business functions will not work cohesively, costing the company time and money.
Every company should have a set of goals and objectives that connect with every area of the organization. In many companies, these processes are fragmented, resulting in an imbalanced infrastructure that is prone to errors. Every department’s goals should coincide with the overall strategic goals, integrating seamlessly into the financial objectives of the organization.
Companies who continue to utilize the top-down mentality instead of taking an integrated approach will have a limited view of the organization, its needs and priorities. These companies also suffer from a lack of internal cohesion, commitment and buy-in from its internal stakeholders.
When formulating a strategy for organizational success, these indicators should weigh heavily on the current and future structure of continued business operations. It is important to understand how detrimental these five indicators are in the livelihood of successful financial performance and management. Taking a strategic and proactive approach in integrating systems that will streamline processes, organize data, involve all internal stakeholders and promote a clear understanding of the metrics that promote growth will assist in helping your organization achieve financial success.
Want to Learn More?
Check out this white paper: Budgeting Beyond Spreadsheets
Fill out form to download your white paper.
* These fields are required.