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Corporate Financial Planning Webinar: 15 Common Pitfalls

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Corporate Financial PlanningIn your company's planning process - do your financial analysts spend more time accumulating and consolidating data than they do analyzing it? Do your senior decision makers feel they receive decision-ready data in a timely fashion? Do people frequently ask how the data will be used or who will see it? These could be warning signs you're experiencing problems with planning. This webinar explores 15 of the most common pitfalls companies experience in their long-range financial planning. You'll learn how to identify pitfalls, diagnose how they impact your business, and find solutions to improve and optimize your long-range planning process.

This Corporate Financial Planning Webinar video is from the Proformative webinar "15 Common Pitfalls of Financial Planning" held on June 13, 2012. The webinar features a presentation from Madison Laird, CEO and Co-Founder, CPM Methods.


Corporate Financial Planning Webinar


"A number of learning objectives today, but at the end of day we want you to be able to see where you might get trapped in some of the pitfalls in the financial planning process, and then how you can overcome them. Learning about them now will certainly help you avoid many of them. In order to help us today, and lead us down the path, I would like to introduce Madison Laird who is the CEO and co-founder of a company called CPM Methods.

Madison is a veteran of corporate performance management and has extensive experience in strategic planning with large, midsized, and small companies. Madison's experience in performance management and strategic planning includes perspectives from large companies like IBM, and Sysco, GM, which is to say general management roles as midsized companies, and CEO roles at smaller companies.

Madison has received numerous honors throughout his career, including a Catalyst Challenge Award from the CFO at Sysco, and a nomination by AT&T for Ernst & Young's Entrepreneur of the Year award. Madison has many publications to his credit, including a recent whitepaper entitled, "The 15 Pitfalls of Financial Planning". That, by the way is the whitepaper to which we will send you a link after today's event.

He has lectured at numerous business programs including the Fuqua School of Business at Duke University, NYU's Stern School of Business, and at the Kenan-Flagler School of Business at UNC. He's taught an MBA course in Hong Kong to boot. An amazing background, perfect person to tell us how to stay out of trouble with financial planning. Madison, please take it away.

Madison: Thanks so much, John. I also want to thank Proformative for hosting the event and Planview for sponsoring the event, and just kind of by way of overview let everybody know that I'm suffering through a little bit of a head cold. If there's a moment of awkward silence I'm just putting the phone on mute while I blow my nose or cough or whatever I need to do. We'll try and get through this here.

"The 15 Pitfalls of Financial Planning", was a whitepaper commissioned by Planview. The reason that Planview decided to ask and look externally on kind of a deep dive on some of the financial planning pitfalls was that they commissioned a study in the fall of 2011 which was benchmarking the planning process. They call it, "The State of Capital Planning". We'll talk about terminology in just a moment. That goes by different words at different companies.

The survey is really all about identifying market pain points and risks in the planning process, as well as challenges to the planning process. It also looks at the effectiveness of the planning process and tools that are used in the capital planning process. I would encourage you actually to peruse the study as kind of a way to benchmark your organization against where most respondents said that they were. Because it is a very comprehensive study, conducted by, as you can see FERF, which is a research affiliate of, FEI, Financial Executives International. Which a lot of you may be members of, and may have been at the conference or in Atlanta recently.

As FEI did that survey, they came back with a number of pain points and risks, and challenges in the planning process, and Planview said, "Let's do a deep dive to really understand what the potential pitfalls or pains are in financial planning." There is a whitepaper which all of you will receive entitled, "The 15 Pitfalls of Financial Planning". What we will do today, is go over those in a more abbreviated form.

The first thing to realize about the pitfalls of financial planning - and actually before we get started, I said that I would talk about terminology a little bit and I do want to do that - but different firms call this process different things. At your company it may be the planning process, or LRP, or long range planning process, or the capital planning process.

What we're really talking about in scope is whatever exercise a company goes through which leads to its annual budgeting. When you look at the 15 pitfalls that we'll work through here together, the first thing that I'd like to point out is that what I say to people is that nobody has all of them, but everybody has some of them. There is no perfect planning process. What I encourage people to do is always look at the pitfalls that we will go through and talk about here through the lens of your company that you're

Editor's Note: Please take a look at some of the other webinars in Proformative's library: Corporate Financial Planning Strategy Webinar, SaaS Consolidation & Reporting Webinar, Managing Debit & Credit Card Merchant Fees Webinar, Evaluating Accounting Software Webinar and Chief Financial Officers & Cloud Computing Webinar.

It's possible that you exhibit some of the symptoms of one of the pitfalls, but in certain cases it might actually be appropriate for your organization to have that particular approach. While there are warning signs, these are things to look for and always filter them through the lens of your organization.

Finally there's a timing issue here as well. The best planning process for a company can really vary dramatically, from company to company, and actually even in the same company from year to year. It's one the, what worked before may not work again kind of things. The whitepaper, actually which all of you will receive follows the same format for each one of the 15 pitfalls.

That format is a description of what the pitfall is, some symptoms so that you can diagnose it within your organization, and then a little bit about what the impact is. In other words, if this pitfall exists, and you start to manifest some of the impacts of the pitfall, then you can understand and look for some possible approaches for avoiding it.

In this climate in fact what works, even at the beginning of a planning process cycle, may not work at the end of that cycle. What I mean by that is some of these pitfalls are ones that may only surface during the course of the planning process itself. At the end we'll talk a little bit about the importance of structure and flexibility in designing the process in the very beginning and how that can help prevent some of the pitfalls from occurring, and then help you respond to them if those pitfalls occur. That's a little bit of a macro perspective on how to prevent or remediate, or address some of the pitfalls.

This particular overview of common pitfalls breaks the 15 into a few key problem areas. I think there are four or five. Then it does highlight three of those for discussion and when we talk a little bit about the way that we did that, that's a classic kind of vend diagram we used to categorize the pitfalls. We actually used a rigorous scoring method to categorize each one of the 15 according to our experience with many firms' long range planning processes and many of the responses that we get back from the survey.

You can see here that the three main criteria used were the most common pitfalls, the pitfalls with the greatest impact, and those pitfalls which are the easiest to address. If you will, the sweet spot in the middle represents the intersection of those three, meaning they're the most common pitfalls. They have the greatest potential negative impact on the firm, and they are also the easiest to address. You could consider them kind of low hanging fruit.

If those particular pitfalls exist in your organization then at least that's something that you can begin to address right away. These are marked in blue as we go through the presentation. Before we get into the pitfalls, it's time for our first polling question of the day.

John: Thank you very much. So this is the first of two polling questions that we've got today. For those of you who want CPE credit, you need to take this. Even if you aren't here for CPE credits, as you'll see, it's a very straightforward question. We'd love to hear what you have to say, and then we'll actually revisit the results of this and our other poll during the Q&A session. We'll take a few moments here.

During this break, I'd love to remind folks to ask questions. We already have a couple of questions in the queue here. Ask questions as we go and we'll do our best to get to them during the Q&A portion of today's program. I'm going to leave the poll open for another ten seconds here. Go ahead and get your last looks in and then we'll close it and get right back to Madison here so he can take us through the pitfalls. All right, I'm going to close it right now, and we'll hop right back to Madison, please take it

Madison: Thank you, John. I appreciate that. The pitfalls have been organized into maybe five slides here that have a question at the top, that are sort of the theme..."

End partial; Corporate Financial Planning Webinar


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