Financial Planning Software: A 2021 Guide

Table of contents

What is financial planning software?

At the most basic level, a financial planning software program is any system that can conduct financial calculations across multiple accounts. However, with the rapid increase in advanced technology, it is reasonable to expect your financial planning software to do significantly more than a simple spreadsheet. Generally, for corporate financial planning, this program will have the capabilities to comprehensively estimate future revenues and expenses across multiple departments. This includes the following tasks: providing templates for varying budget types, allowing users to create separate budget versions with what-if scenarios, developing forecasts through historical budgeting data, comparing financial estimates to actual results, merging budgets from different sectors, and overall monitoring of the financial progress of the company. For more about corporate financial planning and analysis, check out our article here, which explains all you need to know about FP&A.

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What is the value of financial planning software?

Any company that hopes to succeed long-term must implement financial planning into their business model as a top priority. Using a good financial planning software solution can elevate your overall return for this process. Old, traditional forms of financial data storage no longer make the cut in this world of advanced technology; read our article here on why teams are moving away from spreadsheets. For a financial planner or advisor, the right tool should help create important reports and visuals of findings from the analysis performed, which can be used when presenting to executives, etc. It may help generate pitch decks and slides or simpler graphs and charts; all of which saves time in preparing for management and board meetings by giving you the best, most effective visual content. 

Additionally, the main benefit of using a dynamic financial planning software tool is the ability to generate and compare numerous different what-if scenarios with minimal effort. In a traditional spreadsheet, creating these alternative scenarios could take an excessive amount of time, as every input would need to be copied and changed. However, with a financial planning software system this process is efficient and an extremely valuable feature for most companies. Source. Source.

What are the critical features of the best financial planning software?

In order to be competitive in this day and age, a financial planning solution must be a robust program, capable of meeting virtually all of a clients budgeting and collaboration needs. The fundamental purpose behind using one of these programs is to speed up FP&A so more time and resources can be spent analyzing and implementing the results, while simultaneously eliminating the opportunity for human error in the process, which can destroy the validity of budget strategies.

Adaptability and Automation

The number one most important feature of financial planning software is the ability to easily adapt to changes and seamlessly incorporate new data from other programs. This means the system is continuously updating, and doing so automatically without any human intervention. Therefore, the program always has the most complete and accurate data set from every relevant sector in the business. This will trickle down into countless positive outcomes for your financial planning process. 

First of all, it will ensure the validity of the budgeting and forecast models created by the planning software. The results will be an up-to-date perspective of your business’s current financial state, giving you the most effective information from which to work. Additionally, since the financial data is being updated within the system, considerable time is saved by removing the need to manually import and verify the correctness of inputs from other programs. You can be confident in your data when the process is automated and there is no longer room for human error to disrupt this relatively straightforward task. As your business grows, this fact becomes increasingly important as the sheer quantity and complexity of the data coming in increases. 

Collaboration between departments is also most feasible and successful when there is a common, virtual database for all applicable content. This is most relevant to the financial analysts in this case, since it means they have access to the direct inputs from other teams which are needed for financial planning. This makes the data of these different sectors readily available for the use of financial analysts, with clear sources for inputs so the origins can be traced if necessary. 

This increases team efficiency overall as it reduces data input and validation time. You can be confident your data is accurately replicated for any connected program and the data is always up-to-date. For a much deeper dive into these benefits, check out our post here on Financial Planning Automations.

Customizability and User Experience

Another critical feature of an effective financial planning software tool is being able to customize the tool to fit your unique needs, which will allow for the best user experience for all employees interacting with the system. No matter the size, industry, or demands of your business your software should be a tailored experience for everyone involved.

This means that the interface used by each employee inputting data into the system should be as focused and streamlined as possible. The employee only sees the necessary information for him or her, and does not get overloaded by features or complexity only meant for other teams. For example, HR should only have access to workforce data and the sales team to applicable sales data, with the corresponding input tabs clearly marked and visible on the main page, to minimize errors and maximize contribution. 

Additionally, the outputs generated by the software for the financial analysis team should be tailored to their desired format. Whether the findings are being presented in-person or virtually, the most effective visuals can be generated using the right tool. The same is true for final and midterm reports, both of which should be altered to best meet the clients’ needs and present the content in the most effective manner. Source

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Common pitfalls of financial planning software

One common error that occurs when choosing and implementing a new financial planning software is a lack of complete understanding of the client needs and wants. As stated previously, these tools can be very powerful and adaptive to execute very specific functions; however, if there is a disconnect between the implementers of the software and financial analysis team or executives, the power of the program may be lost. It is critical that all parties are on the same page when the implementation occurs so that the company can get the absolute most out of their financial software. 

Furthermore, another setback that may occur would be to exclude access into the program for some of the necessary teams. This may happen for several reasons, but is likely due to confusion on who would be the appropriate users’ of the tool. Various departments may not realize that although this is a “financial planning software,” it should be used by more than just the FP&A team. For optimal use, every team should be inputting their specific data in order to minimize errors, as they are most familiar with the content, and to maximize the quantity of data in the program, since the FP&A team alone would be much less efficient at uploading all the necessary data for their analysis.

Financial planning software- Real world example 

Investment firm AGF demonstrates the value of using a robust financial planning software for their performance analysis. AGF significantly strengthened its forecasting and reporting capabilities by implementing Workday Adaptive Planning into their business. They simplified trend identification across operations by improving visual analytics and what-if scenario planning has proven very helpful, by allowing them to efficiently make strategic, course-altering business decisions. 

The software program AGF chose allowed them to instantly generate visual insights into financial performance through analytics dashboards. Again, these could be highly customized and utilized during board meetings or other important presentations. Workday Adaptive Planning also reduced forecasting, budgeting, and reporting times for AGF by several days by automating these processes and having one single source of truth for all data. Additionally, AGF was able to generate rolling 8 quarter forecasting reports which highly benefited planning and decision making. With these new benefits, AGF was able to save vital time and resources and expend more on sophisticated analyses for payroll, benefits, and advisor commissions. The key benefits of financial planning software are reinforced by the example of AGF implementing Workday Adaptive Planning, which transformed their financial planning experience. Source

Getting the most out of your financial planning software

As explained above, financial planning software can be an extremely powerful tool if executed properly. This starts with a thorough understanding throughout the company of what data should be inputted to the system, and by whom. With all the relevant information being properly added by the owner, the FP&A team is set up to create the most holistic, effective plans and analyses. Employees responsible for inputting data should be encouraged to regularly make updates so the system is most complete at any given time. This fact ties into another critical element of utilizing your software tool: customized implementation. Choosing the right system is just as important as implementing it effectively to meet your specific needs. This process can be somewhat comprehensive and tedious, so it is critical to have the correct help you need so that the full power of the software system can be unlocked. QBIX Analytics can help you gain a better understanding of your financial planning software needs and how to select and implement the right software for the job.

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Further Reading