FP&A: Overview

FP&A (Financial Planning & Analysis) is a specialist function within a businesses finance organisation and a business partner to the broader organisation, tasked with the development and stewardship of the end-to-end processes of Strategic Planning, Budgeting & Forecasting, combined with the downstream rigour of Management Information Analysis and Reporting.

 

These activities should not be limited to the activities of 'finance'. Delivering value to the business requires participation in operational areas of the business in order to ensure the inclusion of both financial and non-financial measures of performance. Together, these form the Key Performance Indicators (KPI's) in the upward reporting of business performance.

 

Core competencies typically expected from FP&A

  • Financially astute, able to interpret data and derive meaningful insight thereon.
  • Business partner, in regular contact with operational areas of the business in addition to corporate and central finance functions.
  • Process owner, co-ordinating the business-wide processes of Strategic Planning, Budgeting, Forecasting and Management Reporting.
  • Technically competent, with an understanding of underlying financial reporting applications and new emerging technologies.
  • Team leader, able to mentor and motivate direct and indirect teams, or in smaller organisations to act as a stand-alone centre of excellence.
  • Thought leadership and project management in times of organisational change.
  • Stewards of associated professional standards and best practice methodologies.

 

Evolution of FP&A Skills

 

As the FP&A professional develops their career from 'Analyst' to 'Head of FP&A', the skills required evolve from a narrower technical focus towards the broader skills of cross-functional partnering and leadership. Influencing skills become more and more important if FP&A is going to be able to steer the decision making process of the business.  This is increasingly relevant as their sphere of influence grows.

FP&A skills evolution

 

Sphere of Influence

 

FP&A's sphere of influence within in an organisation sits across a number of other functional and operational areas, with the balance of influence often being intrinsically tied to where a business sits within its growth and organisational maturity cycles.  The diagram below serves as an illustrative guide, showing how the increase in organisational complexity and scale can significantly add to the breadth of remit for FP&A.  However, thse relationships are never static, as the ebb and flow of business will necessarily result in different weightings through the course of the month-end, budgeting cycles etc.

 

Sphere of Influence_edited-1

 

But as an organisation, we don't have an FP&A function?

Without a dedicated FP&A function, many of these responsibilities will fall on the shoulders of the central finance function and/or Finance Director. Already burdened by other responsibilities, especially during peak periods, can result in the focus on historic results displacing the time and attention required for forward-looking analysis and the strategic review of "Actual vs Targeted" performance.

 

Considering the value that a well designed, implemented and integrated can deliver to the owners and directors of a business, can you really afford not to have one?

 

Sonar are keen to help you fulfill your ambitions, please click here to contact us and arrange a meeting.