Struggling to align finance and operations for better forecasting?

The finance department should align the company budget and forecasting processes to operational KPIs instead of fixed dollar amounts. For example, if a KPI is established of $10 in labor per unit in the budget then the business and finance can stay aligned and the total volume of units can increase or decrease and finance can reforecast accurately. Alternatively if the business is just given a fixed dollar amount then if the unit volume changes the forecast does not automatically update and large misalignments can occur. Some key points: - The business owners and finance need to agree on the KPIs - The KPIs should be monitored and tracked on a routine basis - Finance needs to align with business leaders for every new forecast

The capacity for finance and operations to collaborate and precisely convert productivity KPIs into dollars presents a significant opportunity for budgeting & forecasting purposes. While the time saved from enhanced productivity translates into savings, quantifying these in tangible dollars is challenging. However, through close collaboration, finance and operations can reconcile both intangible and tangible savings.

Aligning finance and operations for better forecasting by using top-down and bottoms-up approaches can make a significant difference. With the top-down approach, set high-level targets and strategies. These targets are based on company-wide objectives and market conditions. By setting clear expectations from the top, you ensure that all departments are aligned with the overarching goals and financial targets of the company. The bottoms-up approach involves gathering detailed input from individual teams. This ground-level data is crucial for understanding the specific needs, constraints, and opportunities within each operational area. By incorporating this data into your forecasts, you're able to create more realistic and achievable plans.

To align finance and operations for better forecasting, establish clear communication channels, use integrated planning tools, develop cross-functional teams, implement rolling forecasts, ensure data quality and consistency, align metrics and KPIs, enhance analytical capabilities, foster a collaborative culture, and leverage technology to bridge gaps, thereby improving accuracy and decision-making.

Equipes de Finanças e Operações suportadas por Dados robustos e confiáveis permitem insights valiosos. Esses findings e insights fortalecem a Colaboração e alinha os Direcionamentos e Decisões. Portanto; previsões mais sólidas e direcionadas por Dados.

Including an open brainstorming process between the finance and operations departments is important as part of the collaboration protocols. In my experience, open discussions and brainstorming can help find innovative solutions and ensure that joint forecasts accurately reflect the business's capabilities and constraints

To align finance and operations for better forecasting, establish clear communication channels, use integrated planning tools, develop cross-functional teams, implement rolling forecasts, ensure data quality and consistency, align metrics and KPIs, enhance analytical capabilities, foster a collaborative culture, and leverage technology to bridge gaps, thereby improving accuracy and decision-making.

Deploying the right personnel to the right position (duties and responsibilities) is also key to complement Training and Education. This also entails routine check and balances, as to whether the mandates given are being executed to complement the smooth operations of the business. Refresher courses and routine team building events will complement networking and knowledge instillation in the Team.

Ideally, operational metrics should inform the budgeting and forecasting process. When there's a direct link between operational drivers and financial outcomes, it leads to transparent accountability, ownership, and alignment on potential risks and opportunities.