The FP&A Trends Webinar: Digitised FP&A Business Partnering: The Formula for Success
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The FP&A Trends Webinar: Digitised FP&A Business Partnering: The Formula for Success
Click here to view details and register
By Larysa Melnychuk, CEO and Founder at FP&A Trends Group and International FP&A Board
The subject of Zero-Based Budgeting (ZBB) and Zero-Based Financial Planning & Analysis (ZB FP&A) has been debated in 11 chapters of the International FP&A Board around the globe. Consequently, we concluded how the process should be implemented.
It is important to remember that there are no ready-made recipes since every organisation has its own requirements for the ZBB and Zero-Based FP&A design. Nevertheless, the following top 10 practical steps should be taken into consideration:
1. Identify the purpose of the ZBB / FP&A exercise
2. Sponsorship from the top is essential
3. Prioritise the items to be investigated and rank them within that list
4. Interview key stakeholders - owners of the high-ranking “decision packages”
5. Identify Key Business Drivers
6. Create a consistent and collaborative ZB FP&A routine if you wish to continue this exercise regularly
7. Create Visibility and Accountability
8. Monitor the Variances and Adjust the Drivers
9. Automate the process as much as possible
10. Create Analytical Culture
All the above steps require the deployment of Change Management techniques. If traditional budgeting mindsets are still prevalent in your organisation, there will be resistance to change.
ZBB is not just a cost-cutting tool. It is a broader concept that can be applied to more than just cost bases. Using a blend of Driver based and Zero-Based techniques can help with transforming the entire FP&A process. This is why we call it Zero-Based FP&A (ZB FP&A)
Plan for ZBB and ZB FP&A Success:
The below conclusions and recommendations were adjusted from the insights that were generated at the London FP&A Circle.
Conclusions
Recommendations
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