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Extended Planning and Analysis (xP&A) broadens the scope of FP&A beyond finance to include all functions of an organization that have an influence on business planning. It makes it possible for all departments to work more effectively, which increases overall efficiency and positively affects financial results.
Extended planning and analysis (xP&A) is the process of extending the capabilities of traditional financial planning and analysis by establishing greater collaboration among all functions of an organization. xP&A focuses on breaking down traditional silos and barriers between finance and other departments to improve collaboration, business operations, and overall business planning. Not only does this cross-collaboration assist with company-wide planning, but it also helps senior executives make strategic decisions to reach their financial goals.
This type of strategic planning involves all functions of an organization including Human Resources, Sales, Marketing, Operations, Research and Development, and IT. Through the use of financial planning and analysis software, Finance can bring all functions of an organization together to review metrics and study business performance at a granular level. By taking a more analytical approach and providing greater visibility into the financial health of the company, teams are better able to align on key value drivers and strategic goals.
Through the help of xP&A, finance leaders can spearhead company-wide planning and analysis to better support strategic decisions and outcomes. Processes that are typically involved in xP&A include forecasting, financial analysis, continuous business planning, performance management, and scenario planning.
Forecasting: Forecasting is used to predict future events or trends based on historical data. This allows organizations to plan ahead and prepare for potential risks.
Financial Analysis: Financial analysis is used to understand how well your current financial position compares to your previous year’s numbers. You can use this information to identify areas of improvement and set new targets for the coming year.
Continuous Planning: Continuous planning is a process that looks at the entire life cycle of a product or service. It includes identifying customer needs, developing products/services, and managing the supply chain.
Performance Management: Performance management is a process that finance departments use to measure the effectiveness of employees and managers. It provides feedback to employees so they can be held accountable for their actions.
Scenario Planning: Scenario planning is a process that allows finance teams to identify different scenarios and evaluate them against each other. This allows companies to see how different situations could play out and allows them to stay agile and adapt to different scenarios.
The benefits of xP&A include:
• Increased Collaboration – xP&A brings all functions of an organization under one roof to work collaboratively and achieve organizational objectives. This increases communication and transparency between the finance department and all other teams.
• Better Decision-Making - xP&A gives the entire organization real-time data and analytics, allowing organizations to make smarter decisions. These decisions will lead to improved operational efficiency and increased profitability.
• Improved Communication - xP&A improves internal communications within your organization. It makes sure everyone has the same understanding of what’s going on and why.
• Greater Visibility - xP&A helps you gain greater visibility into the financial state of your company. With better visibility, you have the ability to take action faster and improve overall operations.
By extending the principles of traditional planning, finance professionals can take a more structured approach to business operations and drive greater impact for the entire organization.
Find out everything you need to know about xP&A from the experts at Abacum today. Read on to discover more.