Have you ever wondered what Sir Arthur Conan Doyle’s character Sherlock Holmes meant when he said, “It is a capital mistake to theorize before one has data?” While he probably wasn’t talking about integrated financial planning, the leaders of today’s Fortune 1000 companies are. As a result, they are looking for data-savvy, creative, collaborative and driven professionals with Master of Business Administration (MBA) degrees and finance expertise to be the next financial leaders of their organizations.
What Is Integrated Financial Planning?
Integrated financial planning is a holistic and data-driven approach to an organization’s budgeting and forecasting process that informs the company’s financial and operational priorities.
In order for organizational decision-makers to know if and when they should expand their team, fund training and professional development, purchase inventory, increase advertising budgets or invest in new tools and technology, they need to have a reasonable expectation of what their profits will be in the coming months, quarters and years.
Likewise, they need to know what potential risks or threats their organization could be facing. Are they expecting increased costs or supply constraints?
Data-Driven Decision-Making
Analyzing historical data and trends can only help professionals predict so much. Therefore, innovative and growth-minded companies expect their Financial Planning and Analysis (FP&A) teams to work cross-functionally with sales, marketing, engineering, product management and operations teams, such as procurement and production teams, to gather input for their budgeting processes.
In a products-based company such as a manufacturer, for example, the following are just a few ways that integrated planning can help a business forecast how sales opportunities will impact a company’s quarterly budget, or how having a process to identify aging products can help a company mitigate inventory liability:
- Review Sales and Operations Planning (S&OP) data with sales and operations leaders on a rolling basis.
- Review order points and inventory turns with procurement and product management teams.
- Make sure you have the marketing and sales data supporting the demand when, for example, the engineering department asks the FP&A team to approve a new product development budget. How many do you need to sell and at what price to defray costs? What is the product’s expected lifecycle? Do you expect to break even quickly enough to profit from this new product?
What Is the Value of an MBA in FP&A?
Entry-level finance positions may be an option with a relevant undergraduate business degree. However, companies may prefer or require an advanced degree such as an MBA in finance for more advanced roles. For example, manager or director positions and higher almost always require candidates with an MBA.
The strategic organizational management and people management skills finance professionals develop in an MBA program is the difference between identifying a risk based on data points and being able to drive an interdepartmental initiative to address it.
For example, if sales from a vital product line have dropped, what questions do leadership counterparts in sales, marketing and product management need to address? Consider the following:
- Is the product line still being advertised?
- Does the sales team need additional training?
- Is the product line priced correctly?
Additional Reasons to Consider an MBA in FP&A
According to the U.S. Bureau of Labor Statistics (BLS), the median annual salary for a Financial Manager is $131,710. However, salaries vary based on experience, industry and other factors. For example, private sector financial management professionals earn a median annual salary of $158,820, compared to $123,010 for those in government.
Significant upward growth within a corporate finance career path is possible through hard work and longevity. The knowledge, skills and tools acquired through an MBA program can significantly accelerate that trajectory and position you to make a strategic business impact much more quickly, propelling you toward higher salaries.
For example, finance professionals who aspire to the role of chief financial officer may earn between $315,000 and $529,300, according to Salary.com, as of May 27, 2022. Earning an MBA is an investment of time, money and effort, but it is also a sign to a company that you are committed to advancing its long-term goals.
Learn more about Arkansas State University’s online Master of Business Administration with concentration in Financial Planning and Analysis program.