How to ace the midyear FP&A review?

It’s almost that time of year again.

The midyear review is when financial professionals reflect on the six months that passed since the calendar year started, analyze financial statements, cash flow, and compare results to the original budget, looking for any significant variances or deviations.

Considering the importance of this inspection and the opportunity it offers to rebalance the books, it’s important to be thorough. Here are some important steps FP&A teams can take during this time of year:

1. Set clear objectives: Define the purpose of the midyear review, such as identifying trends, assessing financial performance, and making recommendations for the rest of the year.

2. Review financial statements: Analyze financial statements, including the balance sheet, income statement, and cash flow statement, to assess financial performance for the first half of the year.

3. Compare to original budget and forecast: Compare actual results to the original budget and forecast for the year, looking for significant variances and deviations.

4. Analyze key performance indicators: Assess key performance indicators such as revenue, expenses, gross margin, and net income to identify trends and patterns.

5. Identify drivers of performance: Determine the drivers of financial performance, such as changes in market conditions, customer behavior, or competitive pressures.

6. Make recommendations: Based on the analysis, make recommendations for changes to the budget, forecast, or business strategy for the rest of the year.

7. Communicate findings: Communicate the findings of the midyear review to stakeholders, including senior management, department heads, and business partners, to ensure alignment and support for any recommended changes.

8. Update forecast: Update the forecast for the rest of the year based on the recommendations from the midyear review, and track performance against the updated forecast.

9. By following these best practices, companies can conduct a comprehensive and effective midyear review that helps them stay on track to achieve their financial goals for the year.

10. Further reading: 

Wharton Magazine: a midyear business review a company's path to success  

Forbes Magazine: A guide to your midyear business review