Precise financial planning is an integral part of every business’s success. It also takes a substantial amount of time and energy from the business’s financial department, especially if the business is dealing with a volatile market. To meet the need for accurate and consistent budgeting, forecasting and financial analysis, large companies have formed specific financial planning and analysis (FP&A) branches within their organizations to help them plan for the future.
FP&A professionals help companies tighten their financial processes and make more informed decisions regarding business operations and financial goals. Keep reading to learn more about the FP&A process and its benefits ‚ÄĒ and how Solver can help streamline this process for companies across industries.
What Is FP&A? Overview: The FP&A Process
FP&A can be thought of as a process involving three basic steps:¬†budgeting, forecasting and analyzing¬†a company’s financial reports.
Within a company’s finance department, FP&A professionals provide financial reports as well as insight into that company’s financial decision-making processes. In general, FP&A professionals work closely with a company’s leadership to provide data-driven support in major financial decisions.
Unlike accountants and financial analysts, FP&A professionals analyze financial data, identify patterns and trends in their companies’ financial processes and recommend strategies to improve their companies’ financial and operational success. The role of an FP&A is multifaceted, but the purpose of this position ultimately lies within helping companies make better financial decisions.
The general FP&A process contains these basic steps:
- Analyzing the organization’s current financial situation
- Defining financial goals based on this data
- Considering variables and identifying different courses of action
- Creating a financial action plan with potential alternatives in mind
- Revising and re-evaluating the action plan with an organization’s leadership as needed
Precise FP&A steps can vary depending on the size of an organization, its industry and any enterprise resource planning (ERP) or other software it has in place. However, the general budgeting, forecasting and analysis steps remain the same across FP&A roles.
Advice From Professionals: Improving Your FP&A Process
The FP&A process can get complex as an organization grows and takes on more financial responsibility. Oftentimes,¬†an unpredictable economy¬†can force an organization’s financial department to get creative when it comes to planning and resource management. This is when FP&A professionals are needed more than ever.
To make the most of your FP&A process flow, take a look at the following FP&A expert tips:
Define the Financial Planning and Analysis Process for Your Company
Every company is unique. As a result, every FP&A process is going to vary slightly from the next. In order to get the most out of your FP&A process, you need to determine what FP&A means for your organization.
To most companies, FP&A refers to the sum of all annual budgeting and monthly financial reporting processes. However, FP&A can also include quarterly re-forecasting, weekly sales reporting and other financial operations.
Determine what your FP&A processes need to look like in order to meet your organization’s short-term and long-term financial goals. Remember that your FP&A process needs to handle both financial and non-financial data from every level of your organization.
Designate a Specific FP&A Department Within Your Company
While handling FP&A processes comes with the territory of finance departments in general, FP&A has emerged as a rather specialized job.
It’s best to have a sector of your finance department dedicated specifically to FP&A processes, where you can benefit from the financial insights of experts who not only know your company but are also experienced in¬†evaluating your company’s financial data holistically¬†and with a vision for future growth.
Having a sector of your finance department dedicated to analyzing how your business is spending money and generating revenue will put your business on track to reach its financial goals.
Get the Full Story Behind Your Numbers
The ultimate goal of FP&A is to help you understand the “why” behind the numbers on your financial reports. FP&A professionals not only gather the company’s financial and operational data, but they also analyze it to determine patterns and correlations between the data and their organization’s financial practices. This helps business leaders spot problematic trends and develop a plan of action to improve their organization’s financial practices.
FP&A professionals help organizations learn from past data so they can improve upon their financial habits and processes. FP&A helps stakeholders understand why the numbers are what they are¬†‚ÄĒ and how to achieve better outcomes.
FP&A processes will inevitably highlight opportunities for organizational improvement. When such areas are identified, companies should harness these moments and learn from them. Not every financial decision is perfect, but when an organization can acknowledge where it may be lacking and immediately get to work on finding solutions, it sets itself up for long-term success.
To make the most of FP&A processes, company leaders must embrace the financial data as they see it and prioritize learning from the insights of the FP&A professionals on their team.
Overall, the FP&A process is a future-focused endeavor. With so many variables such as the market, supply chains, changing internal operations and much more, company leaders can easily get lost in the details of present-day data.
However, good FP&A practices turn the company’s focus toward future growth with cutting-edge budgeting and forecasting models that take a holistic approach to the company’s growth trajectory.
Implement FP&A Software to Improve Processes
One of the best things you can do for your company’s FP&A processes is to implement the right¬†corporate performance management (CPM) software¬†for your FP&A budgeting process needs. At Solver, we offer innovative CPM solutions that can be tailored to the budgeting, forecasting and reporting processes of your company.
With Solver CPM software, you can keep all of your financial data in one place and put together comprehensive reports, perform advanced analyses and more.
Contact Solver to Optimize Your FP&A Processes Today
With CPM software from Solver, financial reporting and analysis has never been easier.¬†Contact us to speak with an expert¬†on how you can optimize your FP&A process flow with our globally popular software solutions. Submit an inquiry or request a product demo today!