Does your finance, planning and analysis (FP&A) team support your company’s growth – or slow it down? For too many CFOs, the answer is the latter. Most CFOs are using outdated FP&A processes that can’t support the rapid decision-making and flexible planning necessary in today’s businesses. The worst part is they are so busy that they cannot stop and rethink those outdated practices.

“Too often, they’re running around like their hair is on fire,” said Steve Player, managing director of Live Future Ready of Addison, Texas, a consulting company focused on planning, forecasting and performance management. “There’s so much that’s changing about their business that there is very little time to slow down and find a better approach.”

Player advocates a more dynamic approach to financial planning than the traditional annual reporting and budgeting process that finance departments and line of business (LoB) managers suffer through each year. The typical annual FP&A process is time consuming, inaccurate, and too static to handle today’s business challenges, and negotiating for an entire year’s worth of resources and quotas creates angst amongst competing department managers.

But before a CFO can work on being future ready, he or she must first get rid of the unproductive practices that obstruct growth — practices that Player calls “the dumb stuff.” Those tired old practices that progressive finance teams must purge include:

1. Only setting annual targets. Also think in terms of quarters, or even months. Because most of the assumptions that financial planners make to create targets are just those — assumptions. They have margins of error, sometimes large ones, and it’s almost impossible to make correct assumptions for an entire year. If sales are increasing by 4 percent over several months, there’s no point in laying blame for not meeting an annual target of 10 percent. Instead, work on ways to increase the 4 percent.

2. Linking bonuses to budget achievements. This traditional practice sets up a conflict of interest that forces executives to negotiate the lowest possible targets for their team. Rather than making positive contributions to growth, budgeting and planning becomes a race to the bottom.

3. Only allocating resources annually. Businesses often continue to pump precious resources into projects that showed clear signs of failing early in the year, simply because there is no requirement to do mid-course corrections. Instead, “set up the team to attack the field as it currently sits,” says Player.

4. Comparing actuals to last year’s targets. As noted in step 1, annual assumptions are often inaccurate, and it’s a waste of time to reconcile the past and present. Look forward, not backward.

5. Only creating an annual budget. This is a hard practice to break. After all, the annual budget is the lodestone of CFOs and every LoB manager. But it shouldn’t be. Annual budgets take too long the create, waste productivity, and cause resources to be misspent on failing projects. They also stifle innovative thinking and big ideas because they have to wait for the next annual budget cycle. Instead, budgeting should be part of a year-round process of analysis and planning, with a rolling 12-month forecast and dynamic resource allocation.

Additionally, Player urges finance teams to stop using spreadsheets for anything more than personal calculations.

“Excel is a great tool for one person. But two people are exceeding its capacity,” he quipped. Instead, finance must embrace new, integrated technologies that can support dynamic, rolling forecasts and budgets.