A Guide to Financial Agility in 2025: Practices for Uncertain Times
As we enter more turbulent markets, companies must incorporate agility into their financial processes. Agile finance works with the inevitability of change rather than against it, making companies more resilient. In fact, Bain & Company research said that resilient companies have higher survivability rates. The question is, how do we make financial systems agile for companies?
In this blog, we’ll explore the rise of agile finance, why it matters to gain agility, and how to get started.
What is Agility?
Agility is the ability to be open to change, rapidly assess the environment, and take action quickly in a fast-changing environment. There are two key components of agility, according to McKinsey & Company:
- Dynamic capability: To move fast with nimbleness and responsiveness
- Stability: To have a platform that is timeless and structured where everyone in the organization is aware of their roles and functions within the business
Let’s face it: We live in a world where billion-dollar disaster events could happen in a snap. According to a study by Dataminr, nearly 70% of organizations experienced at least two separate critical risk events in 2022, and 40% experienced six or more.
Embracing agility can harness your teams’ innovative and collaborative power to meet the challenges of a disruptive world.
Why is Agility Necessary in Finance?
Unsurprisingly, the concept of agility has been on the rise. After the COVID-19 pandemic and the continuous rapidly changing conditions in the market, agility is a required business quality. However, how does this fit from a financial perspective?
Finance and accounting teams struggle to implement an agile approach. The 15th annual State of Agile Report from Digital.ai showed that finance and accounting had the lowest adoption rates of agile techniques and practices. Possibly, finance professionals are used to lurching from one deadline to another with no time to switch up their ways.
However, McKinsey & Company emphasized that this has to change, saying, “To avoid any sudden, steep dives in performance, the CFO and finance team should build more agility and flexibility into their resource-reallocation processes.”
Agility in finance builds the speed and flexibility needed for forecasting, planning, and resource-allocation processes, achieving the following benefits according to the Business Agility Institute’s report:
- Improved adaptability, revenues, customer satisfaction, and higher-quality products.
- Improved employee engagement, transparency, and communication.
- Improved team autonomy and productivity.
Agility in Finance: How to Get Started
Agility in finance empowers organizations with an operational playbook that balances rigor and consistency with flexibility in processes. CFOs can plan and forecast 50% faster while considering multiple potential outcomes than those who are not agile (2022 AFP FP&A Survey: Measuring Agility in FP&A). The question is, how can you begin to implement agility in your business?
To deliver financial acumen in an agile way, you need to first create space and time for review, experimentation, and execution. Simply meeting the budgeted numbers is not going to cut it.
Free up some time in your calendars to learn about the following agile components that support you without being overwhelmed:
- Adaptive planning: Finance teams can adjust financial plans and budgets through iterative and incremental planning. You should have various scenarios where a momentum case accounts for country-specific macroeconomic outcomes and sector-specific implications. Most importantly, your operating plan should have clear key performance indicators (KPIs) and triggers that reveal when the shift from one scenario to another is required.
- Fast decision-making: Shorten budgeting cycles through iterative progress and frequent feedback. Your financial plan should include detailed breakdowns of the ten or 15 highest-value business units, geographies, or strategic initiatives so your finance staff can respond more quickly.
- Dynamic forecasting: Update your financial data in real time and predictably see your data as conditions change. You can have accurate and valuable reports at least twice each quarter through data analytics, an agile feature that Synapse Accounting and Bookkeeping has incorporated for higher client success.
Achieve Greater Agility with Synapse’s Expert Bookkeeping Support
At Synapse Accounting and Bookkeeping, we seamlessly integrate agile practices, which can help you assess strategic alignment to the broader business, clarify decision impacts that accelerate, and define what is viable and valuable to the company.
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Sources:
Agrawal, A., Bradley, C., & Uhlaner, R. (2020, June 9). No longer on autopilot: Lessons for CFOs from COVID-19. McKinsey & Company. https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/no-longer-on-autopilot-lessons-for-cfos-from-covid-19
Finance and Treasury Survey Research & Economic Data. (2022). AFP. https://www.afponline.org/training-resources/resources/survey-research-economic-data/Details/FPAAgility
15th State of Agile Report | Press Releases | Digital.ai. (n.d.). Https://Digital.ai/. https://digital.ai/press-releases/15th-state-of-agile-report-shows-notable-rise-in-agile-adoption-across-the/
Getting Business Resilience Right. (2021, January 7). Bain. https://www.bain.com/insights/getting-business-resilience-right/
New Forrester Study on Managing Enterprise Risks | Dataminr. (2024, September 6). Dataminr. https://www.dataminr.com/press/new-forrester-study-reveals-businesses-are-insufficiently-prepared-to-manage-enterprise-risks/