How to achieve corporate financial performance on a mid-market budget

Monitoring the performance of your business is a critical part of current and future success. Unfortunately, many mid-market companies lack the analytics and forecasting tools to effectively track their organization’s performance and continue to rely on manual processes, which can leave them vulnerable in a competitive marketplace. Traditionally, corporate performance management (CPM) tools have been mostly used by larger companies. CPM describes any practices that enable a business to understand its current financial performance and meet future goals. A CPM system, which can be linked with a Business Intelligence (BI) capability, taps into the data provided by BI to lead an organization to its strategic goals.

Thanks to the introduction of lower-cost tools and methods, finance teams can finally take advantage of CPM capabilities and support their financial planning, budgeting, modelling, and performance management, all within one system that’s integrated with the rest of the company.

As you consider whether a CPM can work for your business, here are some tips to help you make the switch while staying within budget.

1. Start small

It’s tough to gather metrics when you’re constantly in “react” mode. To show fellow stakeholders the importance of tracking metrics, decide on the most crucial data you want to obtain and figure out how to assemble it in an easy-to-read report that communicates the most pertinent information.

Deloitte recommends a one-page “pulse report” that shows key metrics for tracking revenue, operating performance, and working capital. This report should be released regularly, allowing other departments to keep tabs on any changes in the key metrics.

Although the report can be done in Excel, using a tool like Phocas can automatically generate the info you need much faster – and it’s simpler to read and identify major insights.

2. Consider forecasting tools

Look for a financial modelling tool that offers simple scenario or sensitivity planning. CPM enables you to be proactive instead of reactive – which is one of the most valuable ways to drive business growth. To make the most of these key metrics, it’s best to use a simple to use CPM tool that can allow you to test the impact of various external changes on earnings and cash flow.

For example, if you’re planning to add five new employees to the sales team, you can plan out that scenario and its effect on financial performance. That can keep your team one step ahead of any unexpected changes so that you can develop an action plan well in advance.

3. Encourage collaboration

A shift to CPM involves the entire company. To make the most of the switch, you will need cross-functional planning involving the finance, sales, and operations departments. When the sales team is on board with sales projections in the financial plan or budget, it drives buy-in and better sales results.

Communicate with your sales team about how CPM can help better manage the sales function through accurate budgets and sales dashboards that consolidate relevant data and automatically generate reports. Each department should have a stake in the process and understand how it benefits their day-to-day work.

4. Facilitate company-wide decision making

Many mid-market companies have trouble coordinating the collection of data. For instance, the sales team could be looking at entirely different financial indicators than your finance department, especially if you’re using spreadsheets. To improve the collection and use of important data, set up a regular meeting with key department stakeholders to discuss what data to use and how to interpret it.

An integrated CPM tool is the best, most cost-effective option for most mid-market companies as it allows you to manage all of your financial planning and analysis tools in one platform.

With the introduction of products like Phocas’s Financial Planning and Analysis software, mid-market companies can now run their finance function on a live platform that identifies market changes and cash flow dips in real-time.

The software, built on a BI platform, enables your team to identify financial and operational data across the entire organization — so your finance team can forecast for the whole business, plan for a variety of possible business scenarios, and budget collaboratively. Integrate the most useful and cost-effective products in the Phocas arsenal — incorporating the Phocas Budgeting and Forecasting product (B&F), the Phocas Financial Statements product (FS), and the Dashboard tool for Corporate Performance Management (CPM).

To learn more about how Phocas can support your financial planning and analysis, download this ebook: Modern Financial Planning and Analysis.