Many organizations are consolidating their operations due to the economic impact of the Covid-19 pandemic in order to surpass these difficult times. The last 12 months’ events has proved that the uncalculated circumstances can have a major impact on the financial forecasting with only a little notice. This causes for a new strategy for the upcoming years and the future. Agility, therefore plays an important role and is crucial to fuel the necessary resilience in the forecasting of financial sector that businesses need in an evolving environment. Here data is a vital element needed in the planning process. By considering all these, an organization can evolve with few best plans like leveraging data, having the human approach and finally enabling the agility etc. Let us study each in detail.
Many CFOs are now looking to financially forecast one to three years ahead for a greater and a long-term visibility, instead of a one-year projection due to the uncertain climatic changes in the economy. As beneficial as this long term view might seem but supplementing it needs the ability to withstand and adjust within a three month window to any mitigating external factors. Making adjustments within this time frame means that the organizations have to negotiate new contracts with their customers and suppliers to counter act the negative remarks from the decrease in the trading during the times of recession.
It is very important to ensure that the internal systems are constantly available across business departments which enable access to the right data whenever it is needed and creates a common understanding of the things behind the future forecasting strategy. Many organizations are currently having work from home and hybrid approaches to remote or office working is most likely to continue in the future as there has been a strong emphasis on the digitization models and yet there is still so much work to be done. Having the right technology can allow a better visibility and management of financial data and grant access to accurate performance figures that can help shape the forecasting models. As digitization moves forward, the potential of AI fed by accurate data from across the business could in future help organizations plan ahead for the probable future crisis, along with a range of other requests as the technology is more widely accepted. It must be noted however that these progressions are still in the early stages for many establishments in the finance industry.
Technology surely can do most of the work but it is just a single element to agile forecasting and there are other elements too like, the human element, which is the key factor. In order to make it work, collaboration of these approaches and leveraging these available talents instead of withholding the knowledge only between the senior players. Monitoring eternal factors to feed the insights from the current affairs in to their forecasts must be learnt by the organizations from the industry experts. In the next 3 to 5 years, it is very likely that technology powered data insight driving 90 per cent of the financial forecasting and that the human element might persist. The human role will help in analytics and areas of data, communicating with the customers and in many others ways.
The combination of the data and the human interference is what will bring more agility to the companies and helps in accurate financial forecasts. Backing this up would be the technology and innovations in the coming years. The institutions needs to industrialize repetitive mechanisms and refocus employees on the high level decision making areas of the field to help with the agility. These incremental changes can potentially help drive a better forecast and in turn have the institutions be ready for the future.
