6 reasons you should invest in a financial planning solution

In an age of accelerated innovation, it’s become clear that traditional planning tools have limitations that can hold you back from driving business performance.

Generic financial planning tools like Excel are prone to human errors, limit collaboration, and are not equipped to support scenario modeling.

And yet, the best financial planning solutions rely heavily on collaboration, data integrity, and modeling.

So, you may be asking yourself, “what is a financial planning solution?” and “why should I invest in a financial planning solution?”

What is financial planning?

Financial planning is a process whereby a business outlines what they hope to achieve, and how they will achieve it.

Financial planning accounts for long-term objectives and costs, which involves preparing plans that ensure short-term expenses align with the company’s goals.

A long-term strategic plan usually spans five years, broken down into single-year objectives. The financial planning process also often includes budgets and forecasts, which assign specific funds to various activities.

While it is not mandatory to include a budget when creating a financial plan, it can provide a realistic scope for what the company can achieve. Financial planning ensures activities and spending are in sync and prevents resources from being used for short-term projects that don’t align with the organization’s long-term goals.

Financial planning can be summarized into three key elements:

1. Allows a company to draw a goal map
2. Makes decision-making credible
3. Fits into formulating activities

What is financial planning software?

A financial planning solution consolidates and centralizes a company’s financial information for the purposes of planning and analysis. Financial planning solutions support finance teams by giving them the tools to streamline processes and scenario modeling. Since the success of a business's plans relies on accurately predicting what will happen tomorrow, a financial planning solution can make it easier for IT, operations, logistics, and business managers to anticipate change.

A financial planning solution also improves the planning process by acting as a single source of data truth. By eliminating the need to compile and validate data, you can save time and effort that can be spent on executing your plan.

Financial planning solutions vs. Excel

Some leaders have a vested interest in spreadsheets – after all, they were one of the first applications designed to support finance processes. However, when you compare financial planning solutions with Excel, the limitations are clear:

• Non-collaborative – Excel is a personal productivity tool, which means it does not accommodate multiple users who need to collaborate on a single plan.
• Error-prone - The lack of sufficient documentation in spreadsheets can lead to serious errors, often due to incorrect cell formulas, particularly in large and complex spreadsheets where understanding calculations requires examining each cell formula.
• Weak reporting – Excel is not set up to function as a database and has limited complex data manipulation capabilities. Reporting can also be a challenge as it often involves copying results between worksheets and manually formatting each report.
• Macro “insecurity” – When macros are included in spreadsheets, they can cause serious security concerns if they contain malware.
• Limited ad hoc analysis – Organizing your data by account, department, version, or time can be difficult in spreadsheets.

6 reasons to invest in a financial planning solution

If spreadsheets are holding you back from creating detailed plans with actionable insights, it’s time to consider the benefits of a financial planning solution.

Here are 6 reasons to invest in a financial planning solution:

1. Speed

Financial planning solutions can speed up your planning process by removing complications. With access to real-time data, you can effectively track strategic objectives, perform simulations, and create scenario plans. Vendors that offer financial planning solutions spend a lot of time and effort making them easier to use than spreadsheets, which can boost organization-wide user adoption. It also means that users are more productive and spend less time copying data and formulas.

When compared to Excel, financial planning solutions are also significantly easier to deploy. There is no need to install the correct version of a spreadsheet or additional add-ons, which means you can realize a return on your investment sooner.

2. Centralization

Financial planning solutions centralize your operational and financial data in one place, making it easy to improve the accuracy of your plans. This type of software can also standardize your import formats and data aggregation processes, automate report distribution, allocate criteria, and provide forecast calculations based on both actual and planned numbers.

3. Versatility

With the ability to create plans from the top-down or the bottom-up, a financial planning solution gives you the flexibility to present information in a way that best suits your organization.

Top-down planning is a standard feature of a true financial planning and analysis product. Spreading yearly data across months or costs across departments based on historical data is handled automatically with built-in functionality. There is no need to copy formulas or handle circular references.

4. Cloud and collaboration

Unlike Excel, most financial planning solutions are deployed in the cloud, which makes your data accessible to everyone in the organization, no matter where they’re based. A financial planning solution can also improve collaboration, making it easier for departments outside of finance to contribute to the planning process.

5. Data visualization

Financial planning solutions, in contrast to Excel, offer a multi-dimensional and detailed view of company activities, as well as ways to present data visually. With customizable dashboards, it’s easy to create personalized visualizations that help your broader team understand your data.

New accounts or departments will also appear automatically in reports. Companies’ financial data is constantly being reorganized. But when this happens, there is no need to laboriously go into every spreadsheet and add extra rows or columns.

6. Multi-user security

With the ability to set owners and multiple approvers of tasks while helping team members adhere to deadlines with reminders and deadlines, financial planning software keeps everyone engaged and aligned within a unified planning process.

How to choose the best financial planning software

In short, the era of relying solely on spreadsheets for financial planning is fast becoming outdated. Investing in a financial planning solution not only speeds up and centralizes your planning processes, but also provides versatility, promotes collaboration, enhances data visualization, and ensures multi-user security. Check out more resources on FP&A pricing. 

These are compelling reasons to transition from traditional tools like Excel to a more robust, cloud-based financial planning solution. In doing so, you can drive your business performance to greater heights and stay ahead of the competition.