The Public Sector can master Medium-term financial planning with Unit4 FP&A

However, these organizations can regain control with medium-term planning, changing their goalposts throughout the year without causing any major disruption to operations.

But for successful medium-term planning, public sector organizations need digital systems that can connect multiple data sources to provide confident visibility of 24/7 data with a single source of truth.

So how do public sector organizations successfully navigate this landscape? More importantly, how can they plan effectively amidst the chaos? Let’s break down the challenges of medium-term planning and how financial planning and analysis (FP&A) software can help.

What is Medium-Term Planning?

Medium-term planning (MTP) is what exists between short-term planning and long-term planning. Generally understood as a 1–5-year plan, medium-term financial plans enable organizations to remain flexible should their goals and finances change.

In the UK, for example, some local governments file Section 114 notices when they believe their organization cannot balance its budget, indicating that it does not have enough resources to meet its financial obligations.

It is a signal of financial distress, effectively halting non-essential spending and prompting urgent action to resolve budgetary issues, particularly because of funding cuts, increased demand for services (especially social care), and economic pressures like inflation.

Financial distress can be caused by overreliance on long-term plans that end up being scrapped as economic conditions, financial objectives, and other factors change. Considering how arduous a long-term financial plan is to create and get approved, this effort is often wasted, and teams often lack the time and resources to pivot quickly.

What causes long-term financial planning to fail?

There are many factors, not just economic, that may render a long-term financial plan unusable:

• Politics - Changes in leadership, shifting policy priorities, and evolving government agendas will greatly affect public sector funding. When political winds change direction, public sector organizations often must pivot quickly, making it difficult to follow a consistent long-term plan.
• Economic Change – The funding allocated to public sector organizations globally will change with economic headwinds for the region. Forecasting future needs and allocating resources under such volatile conditions can become redundant.
• Regulatory and Compliance Changes – New governance is regularly introduced year on year and can require organizations to adapt plans, such as IFRS 16 or ESG reporting. These changes can throw a wrench into carefully developed plans, as new rules may require shifts in priorities or resource allocations.
• Public Needs – The public sector is ultimately driven by its citizens’ needs for services. It’s hard to predict how public expectations and needs change over time, but it can greatly affect budgets and resource allocation, requiring long-term plans to be changed.

Click to read Helping public sector organizations enhance value with FP&A and HCM v2 (gated)

What does the public sector need for effective medium-term planning?

Medium-term planning sounds great in theory, but in practice, the public sector already struggles to create long-term financial plans due to legacy systems with poor data visibility, time-consuming manual processes, and lack of flexibility.

Moreover, a long-term plan can already take up a large amount of your financial team’s time and effort. When such a plan is changed only a few months in, teams can become fatigued without tools to pivot quickly.

Digital transformation can provide the Cloud-first capabilities the industry needs to navigate financial challenges with an improved user experience.

• 24/7 data – Any financial plan will suffer if it isn’t based on an up-to-date picture of current finances. Modern software helps solve this problem by streamlining data collection, storage, and analysis, providing leaders with insights to make informed decisions.
• Forecasting and Scenario Planning – With AI predictive modeling and advanced forecasting, finance teams can explore how trends, regulations, and conditions will affect finances and plan accordingly.
• Cross-functional data – Comprehensive planning requires breaking down data siloes to account for how HR and other key functions affect the organization’s bottom line. Learn more.
• Automated data processes – Manually consolidating and entering data is slow, error-prone, and fatigues teams. Automation enables finance teams to focus on valuable tasks like analysis.

Master medium-term planning with Unit4 FP&A

Unit4 is dedicated to providing innovative solutions for the public sector. Read about our customer stories, such as the East of England Ambulance Service:

"We now have a single platform to address the Trust’s financial planning needs, from planning cash flow and managing operational budgets to forecasting monthly costs. The powerful budgeting and forecasting functionality enables our team to plan and manage risk much more effectively."

• Darren Ward, Senior Finance Analyst, East of England Ambulance Service NHS Trust

Unit4 FP&A provides a single platform for forecasting and developing agile financial strategies. According to a 2024 AFP benchmarking survey, 78% of FP&A professionals plan to improve technology and data skills over the next year.

Unit4 FP&A is the perfect way to navigate financial uncertainty – talk to sales today to find out how we can help your organization.