Ahead of the FP&A Innovation Summit in Boston, Olga Corbett, director of financial planning and analysis at Intertek, and Chris Caswell, former CFO & COO at Clarks, answer a key question on FP&A strategy.
Innovation Enterprise: How can FP&A drive the outcomes businesses want, rather than just predicting them?
Chris Caswell: One of the things that we did across finance was we became more of a business partner than a financial reporting tool, both in accounting and FP&A. One of the things that we identified was that we had sales organizations making decisions on returns from wholesale customers and basically taking back all of the returns, without worrying about the cost of those returns. So, to remedy this, we were able to learn the true all-in-cost of returns on our company versus different additional discounts that we could give (end of season) to our wholesale customers to make the net P&L better.
Olga Corbett: In my experience – and I know organizations are changing – FP&A is still focused on very technical questions that don’t necessarily require or imply dynamic changes and dynamic predictions. I think that, in general, our role should be in our ability to understand the business well and to be able to make quick decisions, and dynamically predict and evaluate the results without going to technical accounting.
In general, the way that it is accomplished is the way in which our role is defined as supporting dynamic decision-making and flexible planning, as opposed to simply counting the books. I think sometimes we might see that there isn’t enough information, or way too much, and then we don’t know what metric we want to use to make a quick predicting decision.
Forward indicators can help us quickly understand which direction the business is trending and, importantly, if it is supporting or violating certain criteria and detailing which direction the business wants to proceed.
So, to conclude, I think there are three important factors. A: Making sure that the business understands that FP&A is able to make quick decisions. B: It is predicting the focus on the technical accounting and more on what are the rules of thumb that quickly tell us which way the business is trending. C: In relation to business and finance my experience has been working directly with the business partners so that I can understand, fully, the correlation between finance and business. I also understand first-hand the impact on the business as a result and I think that this has helped me to make quick evaluations.
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