Elasticity Meets Cashflow: Finance’s New Muscle
When pricing arrives in finance without context, forecasts suffer. More organisations are building the capability to model pricing assumptions early, enabling scenario-led planning and stronger control over margin outcomes.
Finance teams don’t always get to shape pricing decisions, but they almost always have to live with the consequences.
As it stands in most organisations, pricing may be agreed in commercial teams, but its impact is felt in the financial forecast and cashflow, and ultimately, the margin. When those decisions are made in isolation from planning, the risks tend to multiply quickly.
We’ve explored how disconnected pricing often exposes broader planning misalignments across finance and supply chain. For finance, these gaps can show up in missed forecasts, late reforecasts, or unexpected margin shortfalls. Even well-intentioned pricing adjustments can disrupt cashflow planning and leave teams reconciling outcomes they had no part in shaping.
And yet, many finance teams are still trying to model pricing outcomes with limited tools and little foresight. Without a price-volume planning capability, the margin impact of a pricing decision is often little more than guesswork.
A growing planning blind spot
That gap between pricing intention and planning impact is one of the biggest financial blind spots currently facing many organisations. Particularly in inflationary or volatile markets, pricing has become a strategic lever – and the level of financial visibility around it often doesn’t match the level of risk. Finance may not need to own pricing, but there is a need for finance leaders to model and challenge it.
In teams at the more traditional end of financial planning maturity, pricing still arrives in finance as a fixed input – and often after decisions have already been made. Where planning capability is more developed, pricing is brought into the cycle earlier to be tested through scenario modelling, and then used to shape outcomes rather than just explain them.
Rather than simply accepting pricing inputs from commercial teams, finance teams with transformational maturity actively test the assumptions behind them before they land in the plan. Often, this responsibility sits with a business controller or finance partner – strategic senior financial specialists who are tasked with influencing decisions, not just reporting on them. That might include estimating the impact on volume or modelling how different segments will respond to a price change. It’s a level of planning discipline that can make or break the accuracy of a forecast.
As more organisations invest in smarter financial planning and analysis tools, these planning challenges are becoming easier to manage. For finance, this often means pressure testing elasticity assumptions against historical data or market signals. It also calls for closer collaboration with supply chain and other operational parts of the business, particularly in areas like demand-side modelling, where finance can help shape assumptions around fulfillment costs, channel dynamics and other downstream impacts.
The changing role of finance
Most businesses don’t lack the data to uplift pricing to a strategic level. What they lack is the capability to model and adjust it within their planning cycles. This is one of the fundamental drivers that is reshaping how finance teams see their role, and it is also prompting many to seek external support as they build that maturity.
Strong planning partnerships can help finance teams quickly move beyond reporting and start influencing decisions earlier in the process. We’ve seen organisations go from spreadsheet-based guesswork to more sophisticated scenario planning in a matter of weeks – not just by implementing new tools, but by equipping staff to use them as part of a more connected planning process.
Ultimately, alignment is everything. Pricing, in isolation, is a blunt tool. However, when it’s treated as a planning input, it can become one of the most powerful levers an organisation has at its disposal – something to plan around, not just react to.
We are enablers of change and transformation in Supply Chain, Information Management, Financial Planning & Analytics, Management Consulting, Project Management, and Managed Application Services. Contact us to find out more about how we work with your teams or call 1300 841 048.
