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Theresa May Triggers Article 50: Plan Now for the Disruption Ahead

Today, Theresa May, the British Prime Minister, made good on her intentions and triggered Article 50, which formally notifies the European Union of the United Kingdom’s intention to leave. While the economic implications of this from both a U.K. and international business standpoint are yet to become clear, businesses need to be planning now for how they will cope with the inevitable market volatility that is set to ensue.

There are still two years before Britain should formally leave, but during that time, the economy is likely to be particularly volatile and will require a different type of financial planning from businesses. Agility is key, and to achieve this, finance teams need to take an active approach to planning. This means embracing a process that is collaborative, comprehensive, and continuous—enabling finance to provide insights to help the business respond rapidly to changing market conditions.

Read the white paper “Using Scenarios to Plan for Tomorrow”

As more detail comes to light about how Britain’s exit from the EU is going to shape up, finance teams should be modelling scenarios and forecasting the possible impact on their business. Whether it is a change in exchange rates, additional HR costs due to the need for visas, or taxes and tariffs as new trade agreements are negotiated and decided, businesses need to be prepared for the impact on corporate performance.

Quickly respond to change with scenario planning
With scenario planning, businesses can proactively model for the future and see the business environment with more clarity. This helps organizations make better strategic choices and prepare for uncertainties—like Brexit. Also, scenario planning combined with active planning and cloud-finance automation frees up time to deliver actionable insights to accelerate business performance.

On the other hand, Excel, as much as we all love it, is not the best solution for this situation. Single user spreadsheets tend to become unwieldy, confusing, and prone to error. And if mistakes are entered into a spreadsheet, there’s no way to identify the source.

Agility during volatile times
Simply put, to make the enterprise as responsive as possible to potential changes, FP&A teams must become more agile and collaborative. Indeed, multiple-scenario planning during unpredictable times is a key requirement for CFOs, according to the Adaptive Insights CFO Indicator Q1 2016 report. When CFOs were asked how they will prepare for regulatory changes, nearly two-thirds (64%) said they will plan for multiple outcomes. And, in the same survey, nearly half (48%) noted that in a market contraction, they believe they provide the most strategic value to their organizations by planning for multiple scenarios.

“Planning for multiple scenarios is driving competitive advantage and providing unprecedented visibility to the organization. Agility is key, as CFOs must be able to pivot and adjust to both internal and external conditions,” the Q1 2016 report concluded.

The bottom line
By embracing an approach that leverages what-if scenarios, finance leaders can remain agile through multiple scenario planning, enabling their companies to quickly course-correct as necessary and respond to change with speed and flexibility. They will be better able to make informed decisions and set realistic targets as they navigate a world full of risk—and opportunity. This alone will decide which businesses survive in the volatile economic environment on the horizon.

Read the white paper “Using Scenarios to Plan for Tomorrow”

Rob Douglas is Adaptive Insights vice president for U.K. and Ireland.

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