The Future of Finance: Revamping forecasts with an FP&A software

In today's fast-moving environment, staying ahead means embracing digital tools and forward-thinking finance strategies. Without it, a company would be absolutely lost when managing cash flows, creating budgets, maintaining records, and creating financial plans for the future. As the advancement of technology surges and financial practices become more sophisticated, it’s only natural for finance teams to undergo their own metamorphosis. The role of finance is evolving and morphing into a more strategic player within an organization.

Previously, finance teams were viewed as necessary number crunchers that kept tabs on a company’s metrics. Today, this role is evolving and working on painting a clearer picture of the organization’s overall financials. This necessary shift provides deeper insights and supports better decision-making among business leaders. In addition, by incorporating innovative technology like FP&A software solutions, senior finance executives can shine a light on the importance of accurate forecasting and business planning to support the growth of an organization.

So, what's the future of finance and FP&A and how's it evolving? Our experts at Abacum are here to break it all down for you.

Predictions for Finance in 2025

Over the next few years, finance teams will rely more on real-time analytics to make instantaneous decisions. AI adoption in finance has surged with 58% of Finance functions implementing AI in 2024—a 21% year-over-year increase.

By 2026, 90% of Finance functions are projected to deploy AI-enabled solutions. New operating models built on advanced automation will reshape organizational structures, and finance leaders will also adapt their compliance measures to evolving regulatory standards for data privacy and reporting.

Previously, finance teams spent weeks compiling data from their HRIS, ERP, BI tools, and other platforms to create their forecasts. This process was extremely time-consuming and prone to error, which meant financial forecasts often had inaccuracies that skewed predictions. Today, technological advancements are paving a more automated and efficient path.

However, 49% of finance departments still operate with zero automation, while only 13% achieve full automation. This reveals a massive untapped potential for efficiency improvements in financial operations.

1. Shifting towards emerging technologies

Technology is trickling through every industry, and that's no exception when it comes to Finance. This sweeping digitization is evolving how the Finance function operates within an organization, helping to free up critical resources for more strategic business planning and analysis.

Blockchain technology offers a secure, decentralized ledger that can reduce fraud and ensure data integrity. This shared ledger system simplifies auditing processes and helps maintain compliance, making it a powerful tool for finance leaders seeking more trustworthy data flows. Firms using rapid data processing boost asset return rates by 10% compared to traditional methods. Financial institutions using AI-driven anomaly detection cut fraud incidents by 30% within a year.

AI and Automation for Seamless Transactions

Automation is the engine that drives critical change for a finance team. Previously, when it came to financial forecasting, budgeting, and planning, an FP&A manager had to dig through their data systems and chase team members from other departments to do their job. This fragmented process was inefficient and lacked cohesion across all participants.

According to a recent survey, 94% of CFOs confirm AI improves decision-making and 73% note cost reduction benefits from AI implementation. 80% of CFOs are now leading cross-functional technology initiatives, including AI implementation in their departments.

Blockchain and Data Integrity in Finance

2. Automating forecasting & planning

Now, automated FP&A tools and intelligent budgeting and forecasting tools are taking center stage and evolving traditional forecasting practices. Instead of reaching outwards to pull data, finance professionals can now analyze their metrics from a single, internal analytic tool. Some software even offers communication features directly in the platform, which improves collaboration across all team members.

As these tools evolve, finance operating models must also adapt, integrating data, processes, and teams for seamless collaboration. With the right FP&A tool, you’ll be able to integrate your entire tech stack into a single solution. Manually diving into each individual data system to pull metrics is now a thing of the past. By taking advantage of FP&A integrations, finance teams will finally be able to work on what they were hired to do all along – financial analysis and strategic planning.

It's important to note that artificial intelligence, machine learning, and advanced FP&A predictive analytics come with financial automation technology. By taking an integrative approach to these emerging technology advancements, strategic partners will be able to improve efficiency and take on more value-driven projects.

3. Embracing FP&A technology

FP&A, or financial planning and analysis, is the process of forecasting business performance to support strategic decision-making for company executives and senior management. While this role was always a part of the finance system, FP&A forecasting is now gaining momentum as markets become increasingly unpredictable.

As we’ve seen with COVID-19, teams need to be agile to adapt to what-if scenarios and changes in their environment. By embracing FP&A trends, hiring a strategic team of FP&A analysts, and implementing an FP&A forecasting process, organizations can adequately plan for the future and adjust their business strategy accordingly. Today, companies everywhere are investing in FP&A roles to support their organization. The primary purpose of an FP&A team is to gather, transform, and analyze financial data from different departments such as marketing, sales, operations, HR, and more to create strategic forecasts.

This holistic approach surfaces the importance of finance across all organization teams and helps align company-wide goals among senior management. Instead of taking a team-by-team approach to business planning, financial planning processes help to strip down data silos and organizational barriers to help improve transparency across all team members.

Transforming the Finance Workforce

With manual tasks increasingly handled by automation, finance professionals need new skills in data analysis, strategic thinking, and technology management. Collaboration with other departments is also crucial, ensuring financial insights guide broader business strategies.

4. Expanding the financial role

Now that financial planning processes are evolving, finance teams will start to take on more responsibilities and engage with different stakeholders. Senior finance executives will provide more cross-functional support to other departments and serve as strategic decision-makers alongside the leaders within an organization. Instead of being head-down in excel sheets, the finance team will transition to take a more strategic approach to improve performance across all employees. This shift allows finance teams to have a greater impact on an organization and support business planning like never before.

While finance professionals used to stay in their individual cohorts, these teams are now creating synergy across the entire organization. By sharing predictive analytics and aligning company-wide goals, finance departments are helping to improve collaboration to support data-driven decisions.

Take the chance to discover more about how the role of modern CFOs is evolving in our guide!

5. How to modernize your finance team with Abacum

If your finance team is looking to stay ahead of the curve, incorporating FP&A tools into your business process is the perfect solution. Financial planning software can help automate traditional data processes from start to finish. Not only will this adoption help free up critical time for the finance team, but it'll also allow finance leaders to evolve their roles and become more strategic business partners within an organization.

The finance industry is in a progressive transition. If your finance team is still following traditional practices, now's the time to modernize your approach. In order to keep up, your team must evolve. By pushing for a more modernized financial team, you'll be able to improve efficiency, data accuracy, and financial forecasting for the future.

If you’re ready to revamp your financial planning and analysis practices, Abacum can help. To learn more about our product and how it can support your team, request a demo today.