Planning & Forecasting In Post-Brexit Britain

By Jeff Nevil

IntroductionThe UK’s unprecedented vote on the 23rd June 2016 to leave the European Union has created feelings of heightened uncertainty in the global business sphere. The result of the vote has led to divisions in the UK itself and the world has been thrown into a huge geopolitical shift.

How can we plan for “Unknown Unknowns & how can we refocus, reforecast & re-plan in a post-Brexit reality?

“There are known knowns, known unknowns, and unknown unknowns…the unknown

unknowns, we do not even know we don’t know them”

Donald Rumsfeld 2002

Following on from the vote to leave the EU, many businesses and organisations have found themselves in the “Unknown Unknowns”: an environment of prolonged uncertainty and high risks. Numerous questions remain unanswered with regards to legal and tax implications.

Will today’s Brexit strategy still be relevant tomorrow?

The Unknown Unknowns

The majority of traditional financial planning & analysis behaviour has long been based on the

analysis of “Known Knowns” & “Known Unknowns”

However, in the post-Brexit sphere of “Unknown Unknowns”, a sharp shift towards flexible & dynamic Financial Planning & Analysis is required as a matter

of urgency.

Financial Planning & Analysis

The Changing Role of Financial Planning & Analysis

The following details the steps that are required as we prepare to enter a post-Brexit world

I will now examine these in further detail:

On-Demand Planning

We are likely to see a shift towards a demand for faster decision-making processes.

On-demand scenario planning, swift re-forecasting and advanced analytics are going to be prove to be essential. The ability for a business to adapt are likely to prove the difference between its survival or decline.

Financial Models

The traditional static, GL-based planning models no longer apply. A driver-based approach in modelling becomes essential to on-demand planning & forecasting.

This will ensure that the decision process is smooth & swift. Identify which areas of your business drive the most profit and focus on monitoring & improving these.

Keep it Simple

Dedicated FP&A Systems

While Excel is ideal for ah-hoc analysis, it does have the same clout as FP&A systems, which are essential for on-demand planning and real-time scenario planning.

New generation budgeting and forecasting software is able to manage the planning routine and create an effective collaboration process, enabling your business to remain effective & profitable.

Start Integrating

If you fail to commence integrated planning in the post-Brexit sphere, your business will become less effective and less profitable.

Effective integration can be achieved through encouraging collaborative planning and implanting a driver-based approach through a dedicated planning and forecasting system.

Advanced Analytics

The London Financial Planning & Analysis board defined FP&A advanced analytics as proactive and forward looking. This is in contrast to the traditional budgeting & planning processes that are considered to be backward-looking & reactive.

In the Post-Brexit sphere, prediction & prescription analytical processes will ensure speed, quality & agility.

Time Horizon

Adapting a rolling forecast allows you to make better and faster analytical decisions. You can expand time horizons, improve corporate vision & support more agile decision-making.

On-demand & proactive FP&A is essential in order to overcome the “Unknown Unknowns” that are lurking in our post-Brexit society.

It is imperative that we embrace these challenges and advance into simplified driver-based modelling, advanced analytics & modern integrated planning platform in order to overcome the warnings that were numerous before the referendum.

Conclusion