Simply put, financial predictability is a type of analysis that helps the business build a budget scenario that is very close to the real one . In this way, it is possible to predict (in the coming months or years) how expenses, revenues, seasonality and factors (internal and external) that directly influence the company’s capital will be.
Hypothetically speaking, financial predictability works as a compass that indicates the path to be followed for successful financial management of a business.
One of the main advantages of this practice is to obtain financial estimates based on real data, which help the business owner in carrying out the plans of the company as a whole.
Thus, it is possible to make well-directed, strategic and intelligent decisions. As an example, we can mention the investment in the expansion of the business. With the aid of financial predictability, the manager understands whether it is time to invest in launching a new product or to channel resources to boost sales of items that are already on the market.
There are other benefits of using this type of financial control, they are:
- Creation of a history of the financial scenarios experienced by the company;
- Visualization of capital waste and process failures;
- Identification of impediments that block productivity and the achievement of financial goals;
- Better financial organization;
- Implementation of strategic financial planning ;
- Optimization of financial control.
How does technology help predict a company’s spending?
Yes, spreadsheets help businesses achieve financial predictability. But this feature is not the best option.
In addition to the need to make manual entries, they lack functionality, visualization, quick access to information and organization of financial records and calculations (which require the insertion of complex formulas).
On the other hand, the tools offered by technology generate benefits that enhance the efficiency of financial predictability. One of the advantages is the integration of information on a single platform.
In this way, managers view data on finances in real time and performance reports that help in building the budget forecast.
Another benefit is the ease and security of access. As they are stored in the cloud, the data can be accessed from any computer or cell phone, wherever the business owner is. As for security, information is protected from leaks and loss.
We can mention yet another advantage: the identification of problems and errors when analyzing future scenarios. The precision of the technology is so efficient that managers recognize situations that can cause losses before they even occur. Therefore, it is easier to create preventive strategies.
The result is a financially organized business , stable in the market, efficient in investments and decision-making in general.
And where to start?
According to a study carried out by McKinsey and Company , companies with digital maturity (high technology use rate) have a growth rate three times greater than those that do not invest in this resource. Given these numbers and the advantages presented in the previous topic, the importance of digital tools is very clear.
In the case of financial predictability, technology becomes a game changer in the way budget projections are carried out. But how to implement this practice in the business? Next, we point out the main ones.
1. Understand the company’s needs
The first step towards implementing financial predictability with the support of technology is to recognize the needs of each sector of the company. Perhaps an industry needs to organize expenses by date, category, or cost center. Another area may need real-time information on cash flow and financial releases.
By mapping these aspects, managers understand what the business really needs. Doing so saves money , time and energy in finding solutions that are not adequate. The result will be a well-targeted and strategic implementation.
2. Make good planning
The next step is planning for technology deployment. For this, it will be necessary to draw up a schedule with specific deadlines, tasks to be carried out and their respective responsible. Benefits of establishing a schedule include:
- Estimation of the average time of activities;
- Elevation of focus and productivity in the project;
- Anticipation of failures and definition of preventive actions;
- Better cost management .
Among the forms of project management that we can use in planning are agile methodologies . This set of practices divides deliveries into phases, optimizing the workflow and enabling them to be completed more quickly. Below is an example of how these steps can be broken down:
- Mapping of the needs of the internal sectors. Deadline: first quarter of the year. Responsible: managers;
- Definition of the tool that delivers functionalities compatible with the identified needs. Deadline: second quarter of the year. Persons in charge: professionals from the internal IT area (information technology);
- Technology deployment phase. Deadline: third quarter of the year. Persons in charge: support professionals from the company that developed the technology and internal professionals in the IT area;
- Training of employees and beginning of the use of the new tool. Deadline: fourth quarter of the year. Persons in charge: internal IT professionals and personnel training and development (T&D) professionals in the human resources (HR) sector.
3. Talk to your team
Among the phases of the technology implementation schedule that will help with financial predictability, special care must be given to the employee training phase . After all, this team will be “at the forefront” of using the tool, will notice the positive results and improvements that need to be made.
To be successful with the training, it is important not only to pass on knowledge about the technology’s functionalities. In addition, it is essential to listen to employees’ doubts, suggestions and complaints. In this way, the process will become more interactive, efficient and practical.
Another important action should take place after training and starting to use the tool: collecting feedback from professionals. What are you thinking of the technology? What results are you getting? Are there features that can be improved or modified?
These impressions are very valuable. Through them, the business builds a technology deployment project that will be sustainable, upward and scalable. In addition to collecting feedback, managers can also use metrics or performance indicators (KPIs).
The idea is to monitor the results obtained with the new tool. With the help of metrics, the business has answers to questions such as: Has the financial organization improved? Are the projections consistent? Is it easier to manage finances? Is it being more practical to follow the company’s entries and exits?
By combining team feedback with information from KPIs, the business will have a collection of data for making assertive and intelligent decisions.
4. Research and analyze the options well
Before actually purchasing a technology, some factors deserve attention. Are they:
- Credibility of the developer company;
- Recommendations from customers, business partners and suppliers;
- Features offered;
- Support and training provided;
- Customer service channels;
- Package of plans and services;
- Payment options.
Analyzing all this information takes time, attention, and a good deal of research. But all the effort is worth it, since the choice has a high chance of being right. Therefore, managers will not have “headaches” but peace of mind to carry out business projects.