Interest rate pressures, geopolitical complexities, the persistently tight labor market: uncertainty in the economic climate looks to continue for some time even as inflation eases, according to KPMG’s recent forecasts. That points to the urgent need for accounting and financial planning and analysis (FP&A) teams to work more cohesively, helping their organizations navigate the thorny issues of a quickly changing world.
This reality became exceedingly clear with the pandemic, when Workday saw a thirtyfold increase in the number of plans created with Workday Adaptive Planning. “Folks went from being able to get away with annual or quarterly plans to needing weekly and daily reports to make sure they could survive,” said Tom Peff, senior director, product marketing, Workday.
During a recent Workday webinar “Friend or Foe? Bring FP&A and Accounting Together to Execute New Strategies Quicker,” Peff moderated a discussion between Melissa Kullander, Workday vice president of finance for products and technology, and Patrick Hoynes, Workday financial controller. Kullander and Hoynes explained how their teams use Workday Enterprise Management Cloud to become more aligned, agile, and adaptive. They also discussed the benefits a stronger finance function brings to the organization as a whole.
1. Taking the Pain Out of Determining Useful Equipment Life
Evaluating the useful life of equipment may never be the flashiest of tasks, but it’s a key component of running a healthy organization. After evaluating the useful life of our servers, Workday determined we needed to increase the useful life of hardware equipment from three to five years—a project that would involve changing tens of thousands of records in the system.
For this initiative, finance couldn’t simply rely on high-level estimates. “If you change your server’s useful life, you need to have the exact numbers, both to close your books and to know next year’s budget,” Kullander said. “And then you need to operationalize that.”
To manage the change, the accounting team first modeled the scenario and tested it on the Workday platform. “And because we had tested it, we knew what to expect,” Hoynes said. The change to useful server life was implemented and operationalized in just a few hours—“a great example of our collaboration,” Kullander added.
2. Producing Real-Time Cash Flow Reporting and Forecasting
Waiting for information often means dated information. With a unified system, Workday teams don’t have to wait; we can run direct cash flow statements on a daily basis. And instead of relying on broad-stroke spreadsheets, teams can instantly compare bills sent with payments received. That allows the organization to understand what will happen with cash flow the next month or week—or even the next day. And with “worktags,” finance teams can make every transaction highly searchable and reportable.
“It’s an amazing ability for us to use the system to get to a level of detail so we can make real business decisions, as opposed to waiting for data to come in,” Hoynes said.
3. Boosting Collaboration With the Treasury Team
It’s been an interesting time for exchange rates, to put it mildly. Changing rates have had a dramatic impact on Workday’s exposures. Fortunately, Workday Enterprise Management Cloud provides timely reporting that helps teams understand the company’s foreign currency exposure—allowing the treasury team to lessen risks via hedging activity. These insights also allow Workday’s local business clients to mitigate the risk of having too much cash in a specific currency while having enough funds to continue their operations.
“It’s a great opportunity for us to collaborate and provide information for our business to make good, solid decisions,” Hoynes said. “And the results speak for themselves: We can hedge most of our exposures throughout our organization.”
4. Getting Visibility Into the Close
When organizations rely on legacy enterprise resource planning (ERP) systems, accounting and FP&A must deal with separate, siloed data sources—in effect, two separate versions of truth. Workday’s platform instead provides a single, shared source of truth. This allows teams to know where the close activities stand at any moment. This capability has been particularly helpful with remote and hybrid workers, and it allows organizations to track their progress toward a zero-day close. When a team can’t quickly huddle in a conference room, they can use Workday’s platform to access the same up-to-date information.