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The top challenges and priorities for finance leaders

Learn CIPFA’s best practices for agile financial and scenario planning and how an aligned technology ecosystem can help public sector organizations thrive.

The public sector has faced massive disruptions over the last few years, and as a result, organizations in the sector are now looking at how they can adapt to these changes to survive.

In our recent survey and CFO roundtable with CIPFA, we discussed the CIPFA Financial Management model, the top challenges and changing needs facing finance and business leaders, and their priorities going forward. In our webinar, we uncover the survey's findings and look at how an aligned technology ecosystem can help public sector organizations thrive.

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To drive accountability, public money needs to be managed well with accurate data that is complete and easily accessed. To support organizational performance, finance teams must be relentlessly committed to continuous improvement. And to enable transformation, the business needs to positively seek finance teams’ input into strategic and operational decisions to add value to the delivery of their objectives.

The top 6 issues highlighted by the Financial Management model users were:

  • Budget setting and financial strategy
  • Accountability for financial performance
  • Chief Finance Officer (CFO) role
  • In year agility – management accounting/forecasting
  • Business partnering
  • Corporate governance, and transformational change

To address these challenges, several areas can be looked at.

Finance teams need to partner with all stakeholders in the organization and get alongside them to manage financial planning. Budget setting is not just a finance function but needs input from across the organization, so every stakeholder team has their needs and financial aims and objectives considered. Care needs to be taken to manage the challenge of targets to cut costs that could cut across the need to plan and develop services. Service plans should drive financial plans, not the other way around. Budgets need to be owned by cost center managers or service budget holders. The top-performing public sector organizations are partnering with all internal stakeholders to enable this.

There are also financial strategy issues facing public sector organizations right now:

  • Lack of long-term financial planning.
  • Levels of funding have shorter timescales.
  • Fluctuations in specific government spending.
  • Reactive, not proactive, responses to service delivery improvement requirements.
  • Conflict between local political initiatives and government policies.
  • Uncertain levels of demand.
  • High and volatile inflation.
  • Increasing expectations.

Short-term funding issues have resulted in short-term plans, but longer-term plans are still desperately needed. Uncertainties around the cost-of-living crisis, inflation, and dire citizen issues such as homelessness have presented an enormous challenge with uncertain resources to tackle them. However, there are ways to develop good and balanced budgets.

A good budget is hard to achieve but should be based on a medium-term focus that supports the strategic plan of the organization; resources focused on priorities and organizational vision; an evidence-based, data-driven approach; transparency informed by stakeholder consultation; integration with capital programs; and maintaining longer-term financial security.

Technology and scenario planning

Financial scenario planning is using a strategic planning tool for improving financial forecasting by evaluating the uncertainties, risks, and opportunities of multiple potential future situations. It makes assumptions and then uses contingency planning for what really happens. It’s about looking at what is more likely or less likely to happen. And using spreadsheets for this is just not good enough.

The 4 big questions to ask when scenario planning are:

1. How have we done?

What back-end systems are you currently using to provide financial information? 

2. How are we doing?

Are we consistent? Are our processes standardized? Is our data reliable?

3. Where are we going?

Consider market variability, fluctuating demand, your growing community, and seasonality.

4. What should we be doing?

The answer to this last question lies in the pain points of using outdated legacy systems or spreadsheets that are not helping your organization plan as it should. Spreadsheets work for individual workbooks, but when you have multiple stakeholders across the organization, all with their own version of the truth, all with their own ‘where do we want to go’ answers, there is a problem. Planning becomes resource intensive for finance teams, there is no collaboration, and people work in disjointed silos with no clarity. Budget holders are often non-finance people, so spreadsheets can create a lack of trust in the data needed for scenario planning.

So what should we be doing?

An excellent way to start is to learn from the past. If using Excel blocks planning speed and limits collaboration, then a new approach is needed. Unit4 FP&A bridges the gap into transformation. With pre-built content, it removes silo-based work and brings financial models together, giving the organization one source of reliable data truth.

Customer Example

Unit4 has an NHS customer organization from the East of England that wanted to move away from the traditional top-down approach to budget setting to a more collaborative approach. The customer has around 200 different budget holders, and within a month, their new system was live, and they were able to carry out budget planning for revenue and capital programs in FP&A. Once that was bedded in, the budget monitoring process was set up. The organization saw an ROI and a fast time to value after implementation and has developed its IFRS 16 reporting capabilities and statement of accounts within FP&A.

By doing this and deploying this agile approach to FP&A, the data transfer happens more quickly, and the organization adopting this tech becomes able to develop meaningful models. FP&A takes you from where you are today through that transformational journey to true collaborative financial management.

Click here to read more about how our products have helped transform organizations like yours.

How Unit4 can help your organization

With Unit4’s software systems, you can adapt and optimize how your people work to help you manage complexity and focus on the things that matter. Unit4 has a long history of supporting public sector organizations, so our next-generation smart ERP and FP&A software solutions are right for your business. With us, you can ‘Experience Real Purpose’ with an adaptable solution that’s right for you, now and in the future.

To discover more, click here to watch the full webinar, or you can book a demo and see what our solutions can do for your public sector organization yourself.

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