Financial planning and analysis (FP&A) professionals own the financial planning, budgeting and forecasting process at a company to inform major decisions made by the executive team and board of directors. These employees collect, prepare and analyse financial data from across the organisation to create reports that provide data-driven answers to business questions. The FP&A function is becoming increasingly forward-looking. It’s using best practices to focus not only on what happened or what’s happening but on why it’s happening and what is likely to happen in the future.
An FP&A director or analyst should be a business partner for the entire organisation, working closely with various business units, and a strategic advisor to the CFO or controller. These professionals help leaders of the finance department maintain and mitigate additional costs by identifying opportunities for efficiency, savings and investment.
The role of FP&A has evolved in recent years. In the past, FP&A analysts focused on recording and reporting financial results and leveraging historical financial data to extrapolate future sales and earnings. But the flood of data available today and the technology that helps analysts use it has empowered FP&A to move from more reactive work to providing insightful predictions and analytics that directly influence the business’s direction.
FP&A is distinct from accounting in that it focuses on forward-looking data and attempts to anticipate future outcomes, while accounting reviews past and historical information to determine a company’s current financial state.
An FP&A analyst or director needs to excel at math and have an appetite for crunching numbers. It’s therefore no surprise that many people in this role are former accountants. But professionals in this field also need to be comfortable diving into complex and varied data sets from sales, marketing, human resources and operations.
Spreadsheets are an essential tool in analysing that data, so FP&A employees need to be skilled with Microsoft Excel or a similar tool. They need to know the formulas and processes that will allow them to aggregate and manipulate raw data to produce key reports. They should know the basics of ERP systems, understanding how this software can automate reporting and assist with more complex reporting and analysis.
Since FP&A team members need to communicate and collaborate with colleagues from across the organisation, they should have strong business partnering skills. Business partnering skills include the ability to work well with others and understand their business priorities and goals, build a deep knowledge of the company and its processes, and turn droves of information into easily understood reports. Finally, FP&A demands exemplary problem-solving skills, as these employees must overcome the challenges inherent in consolidating and reconciling financial data.
FP&A is typically a role an organisation adds personnel to as it becomes more complex with multiple locations, subsidiaries, departments or international operations. That explains why some companies are just beginning to build up FP&A resources and headcount, while others have high-performing teams that regularly feed strategic reports to the C-suite.
A company looking to add this function could move an existing accounting leader hungry for a new challenge into FP&A. That person’s understanding of the unique aspects of the business and historical knowledge should give them a head start in their new role. If a company takes this approach, it should strongly consider paying for this person to become a Certified Corporate Financial Planning & Analysis Professional through the Association for Financial Professionals (AFP). Most FP&A leaders have this certification, and if an external hire makes more sense, look for someone who has this credential.
A typical FP&A team structure at a business with one or two FP&A employees has them reporting to the CFO. As an organisation builds out its team, it may add a director of FP&A who reports to the CFO and multiple FP&A analysts reporting to the director.
Although job titles and roles of FP&A team members will vary by company, here are common titles and their respective responsibilities:
Corporate Financial Analyst
FP&A Manager
Director of FP&A/Vice President of FP&A
The primary challenge FP&A teams face is data collection. FP&A teams spend 75% of their time gathering and processing data, per the AFP survey, in part because many don’t have access to source systems. They’re still drowning in a tsunami of Excel spreadsheets, which are error-prone, often slow to process data and limit collaboration. Additionally, many senior executives who should draw strategic positions from FP&A insights don’t trust the data or analysis enough to let it guide their decision-making.
FP&A teams that rely on spreadsheets to manage planning, budgeting and forecasting struggle to keep up with their growing list of responsibilities. A planning and budgeting solution that pulls real-time data from the ERP and keeps all this information in one, accessible place makes FP&A professionals’ jobs easier while increasing their value.
The less time FP&A spends searching for and aggregating data or sending emails, the more time it can spend analysing and creating reports. It’s no surprise that the AFP survey indicated “very or extremely effective” FP&A organisations were “significantly more likely” to have automated reporting and data visualisation tools. This results in faster planning cycles, more sophisticated modelling, more accurate forecasts and better predictive planning that drives lasting success.
NetSuite Planning and Budgeting is integrated with NetSuite ERP, so it automatically pulls accurate, up-to-the-minute information and eliminates the FP&A team’s dependence on spreadsheets. Since all this data is in one place and visible to everyone who needs it, there are no concerns about looking at outdated data or reports. This accessibility boosts collaboration and accountability, making it easier to get meaningful input and facilitating company-wide and departmental planning.
Features of the NetSuite Planning and Budgeting solution include revenue and expense modelling, approval workflows and management reporting. The solution offers powerful predictive planning that uses historical data and industry-specific statistical models to predict future results, improving the accuracy of forecasts. Ultimately, NetSuite Planning and Budgeting enables FP&A team members become the valuable business partners they should be.
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