The Who, What and Why of Financial Planning & Analysis
What is FP&A
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A quick guide to the basics
You may know FP&A by different names depending on company or location. But it always has the same goal: optimize the use of capital and resources by supporting business decisions. FP&A steers the ship as the role of the CFO changes to become a better partner to the business.
Accounting is focused on Where Capital Was. Financial planning and analysis has its origins in accounting. And for many years, a robust accounting function could be leveraged for preparing budgets, reporting the numbers, and filing securities documentation. Today, the FP&A field is more specialized and requires a different mindset and skill set than accounting.
Accounting
Ensure financial controls are in place to govern and report on financial transactions to owners (investors), regulators, and interested parties.
Treasury
Ensure capital is available in the right place and form, ready to be deployed; incoming funds can be received.
FP&A
Support business decisions to allocate capital to its most productive use, through planning (budgets and forecasts), performance management, financial analysis at all levels of operation.
FPAC, Certified Corporate FP&A Practitioner
CTP, Certified Treasury Professional
CPA, Certified Public Accountant
Strategic Planning and Budgeting
Report Financial Key Performance/ Results Indicators
Build and Maintain Models and Projections
Forecasting (demand, cash flow, performance)
Corporate Reports and Business Analysis
Communication and Presentation Techniques
Deliver key financial insight based on constructed models, data and information.
Financial analysis
Translate the strategic plan into a strategy that coordinates the company in a measurable way. This includes forecasting and budgeting for those that use budgets.
Manage its own growth
Performance management
Integrated planning and forecasting
Develop effective, trustworthy and timely reports so you can deliver the right information to the right person, at the right time, in the right format.
FP&A plans its own growth to remain relevant to the changing operating models of business, data management and systems architecture, and team development.
FP&A drives business decisions through these key services.
Coordination of Deliverables, Deadlines, and Expectations
Knowledge of Common Financial Software/ Systems
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Click the circles to see more information.
Though it may seem like treasury is somewhat lagging in embracing new leading technologies, adoption is already surprisingly high.
See who is doing FP&A at your organization.
Accountants, early in their career, typically interact with other accountants.
FP&A is both a box on the organization chart plus the roles and skills required for planning, performance management and financial analysis.
FP&A Organizational Chart
FROM INTERNAL FINANCE TO BUSINESS RELATIONS
Accountants give you the balance sheet and the income statement and tell you what happened.
FP&A builds relationships with business partners to analyze operations and make decisions.
FP&A takes this information and tries to peel back the layers to truly understand why that happened and how it can be used going forward.
Both roles require the application of financial skills and knowledge to financial reports and operations with the goal of improving business outcomes.
Accounting requires a very high level of accuracy.
As an accountant, you focus on the small details taking place and removing context from it.
Accountants may dismiss small variations that do not meet their materiality thresholds.
FP&A recognizes that data is seldom perfect or complete, but decisions need to be made in changing markets
The challenge is making the leap between the small details in front of you on a particular process, product, service, or general ledger expense line, and connecting that to the entire enterprise.
FP&A may see small variability and identify it as the potential start of a trend or business change.
FROM CERTAINTY TO PROBABILITY
3/3
2/3
Accounting records the transactions.
Accountants provide information to management but also report to shareholders, creditors and regulators.
The format for accounting is standardized and must comply with set rules, such as GAAP or IFRS.
FP&A is consumed with identifying where the company should put that money to work in order to create the most value and the best long-term returns.
FP&A serves management and the business leaders who want a blend of financial and operational metrics.
FP&A can create reports that suit management and are tailored to different users throughout the organization and may include visualizations, dashboards and scorecards.
1/3
5/12
A commercially minded finance person partnering with the business to maximize plans and opportunities. It may be function-specific, such as supply chain business controller, commercial business controller, or strategic business controller.
1/12
Oversees productivity and efficiency tracking of key production and logistics metrics that drive efficiency and financials, such as variable/fixed production costs, transfer freight, warehousing, trade freight, and pick-up allowances. Unlike pure cost accounting, this group forecasts possible cost headwinds (like inflation) and alerts management to take swift action to offset (such as price increases).
8/12
Working with the P&L owners, they convert business plans into financials and explain performance, including product/business case development, product performance, allocations and profitability. Also called “marketing financial support”, these roles indicate a reporting relationship with marketing and sales by way of a dotted line.
6/12
FP&A focuses on Where Capital is Going and goes by different names in different countries and organizations. But for most, FP&A sits between Accounting and the rest of the business.
Sometimes it’s easier to define what isn’t FP&A, such as the three titles below.
Similar to a finance analyst, but the emphasis on expense focuses the role on cost containment. Some typical expense analysts are for trade, marketing expense and G&A, and the expenses have significant impact on the bottom line. This role may be in FP&A or accounting
An accounting, compliance and risk-focused financial professional. The role could also serve as business partner, steward, and co-pilot to the division’s general manager and management team for financial decisions.
10/12
An integrated management process that links revenue drivers and supply chain/fulfillment operations to ensure customer delivery and financial planning. It requires collaboration, inputs, adaptation and alignment at the cross-functional and management levels and usually has integrated software specific to operations.
9/12
A finance utility that supplies high-quality, highly efficient standardized services, such as data collection and reporting, research, and various financial transactional services (e.g., accounts payable, accounts receivable, general ledger).
7/12
Could be a defined role or a task within a role. The partner supports the business through financial analysis, reporting and forecasting; they also act as a reference point to other parts of the organization when specialized skills are required. Often translate complex information into readily understood concepts and outcomes.
4/12
In a hub-and-spoke model of FP&A, these teams are the spokes, residing in various units as business partners and conduits to the central planning team and CFO.
3/12
In a hub-and-spoke model of FP&A, the centralized FP&A team is the hub, aggregating input from the spoke teams by consolidating financials and presenting them to the CFO and other executives.
2/12
Business Controller
Corporate FP&A
11/12
12/12
Business Unit FP&A
Finance Business Partner
Finance Analyst/Finance Consultant
Line of Business Finance
Shared Services, Center of excellence/ Business analytics
Operations Finance
Sales & Operations Planning
Financial Controller
Expense Analyst
Click through each function below for a full definition.
Historical focus:
Investors:
Financial reporting:
Precision:
Granular:
Deciding what’s material:
Directional:
The big picture:
Not too small to care:
Internal function:
The “what”:
Partnership:
The “why?” and “now what?”:
Future focus:
Business partners:
Management reporting:
Meet a few in real life.
What’s it like to be an FP&A professional?
“I enjoy working in FP&A as we have a unique opportunity to become a trusted business advisor by building strong business relationships, telling impactful business stories, gaining solid business acumen and providing helpful business insights.”
FPAC, Global Finance Lead and CFO Middle East North Africa, Pharmanovia, Dubai
“I enjoy working very close to business, analyzing the value chain, being involved in key decision making, leading different cross-functional projects, learning the other functions world, and creating value as a true business partner.”
Responsible for supporting and monitoring the business performance.
3/5
1/5
This includes managing the P&L elements — sales volume, pricing, gross to net, profitability per product, and OPEX — through giving full visibility to budget owners about their performance against the plan
Highlighting any sales performance gap and working with the commercial team to find solutions to close that gap
• • •
Ensuring no overspending by properly tracking the OPEX per function
Calculating the ROI for any proposed trading and promotional activities
Highlighting any potential business risks and opportunities, and getting an action plan to mitigate risks and materialize opportunities
Lead the annual budget, financial forecast and long-range plan process from end to end Develop the annual planning calendar; developing the manual for the planning process, timelines, tasks, and tasks owner Preparing the financial planning models and tools; giving training on the planning tools to the users; and designing the planning reviews presentation decks.
•
Responsible for providing different types of management reports that support different levels in the organization, starting with the monthly management deck, including…
2/5
Executive summary of the KPIs actual performance vs. plan and vs. prior year Sales performance by product, country and region Profitability analysis by product and by country Operating expense (OPEX) tracking by function Headcount tracking Monitoring risks and opportunities; and Working capital aging analysis.
Financial planning
Management reporting
We support both operational and strategic decision-making as FP&A trusted business advisors. This includes reviewing and supporting the preparation of business cases for new product launches, entering new market business, divesting business units, headcount optimization, resource allocation, etc. We provide the business with all the needed analysis to support decision making, providing what-if scenarios and options, and asking the right questions to get the proper business insights.
4/5
Decision support
• •
FP&A works with different functions across the organization, either as a project leader or as a project team member, in areas such as operations excellence, finance, and commercial Examples of projects include OPEX optimization, cash flow improvements, commercial excellence, sales force effectiveness, digital transformation, new system implementation, etc.
5/5
Cross functional projects
FP&A Manager, Hologic, Australia
“I work for Hologic, a company that focuses on women's health. My job focuses on analyzing, concentrating heavily on revenue, standard margin and gross margin.”
The FP&A role is a perfect combination of both my personality and my degree. I am a very detail-oriented person, and like a private detective, I enjoy figuring out what is missing and solving the mystery. I also like to resolve problems. This role is perfect for me.”
Regional FP&A Manager, National Instruments, Singapore
In this hybrid work era of the coronavirus pandemic, I spend 60-70% of the week working from home and the rest in the office. Here’s what a typical day looks like managing the FP&A function for the Asia Pacific (APAC) region.
In an interconnected world, and I often have night phone calls. Usually twice per week I will attend a call that requires my direct involvement, such as my manager’s weekly staff meeting, global FP&A team meeting, project or budget calls.
7 a.m.
8:30 a.m.
9 a.m.
10 a.m.
12 p.m.
1 p.m.
3 p.m.
5 p.m.
After hours
Final email check before “clocking out” for the day.
Focus block! During this time, I might work on forecast and budgetary planning or reviews, project matters, system issues, financial models, presentation decks, employee development matters, or personal learning and development.
Small group meetings such as weekly one-on-ones, manager meetings, bi-monthly catch-up with the RVP and monthly sync-ups with functional leads in sales ops, HR and other finance sub-functions that FP&A works closely with.
Break time! Lunch, midday workout, Breathe.
Dial in to the weekly APAC leadership meeting, chaired by the regional vice president (RVP), attended by various regional directors and functional heads from sales, technical support, HR, legal and finance. This weekly leadership call provides insights into what goes on across the geographies and functions and a platform for cross-functional interactions.
Check the top news of the day, paying extra attention to regional news that might impact spending and business engagements in the region. Then take meetings with key groups.
Scroll through my emails for urgent incoming matters and the easy ones requiring short replies, then spend 15 minutes reviewing the day’s calendar and planning what to work on that day.
Wake up, power up computer, coffee
I work for Hologic, a company that focuses on women's health. We provide diagnostics, breast health, skeletal health and surgical, in addition to being a medical device company. Currently, our finance team consists of six people. My team is made up of the general manager, followed by my finance director. Then, the main team whom I meet with weekly include the business unit directors and portfolio managers. My job focuses on analyzing, concentrating heavily on revenue, standard margin and gross margin. I also focus on reporting as we do a lot of standard margin bridges to understand what is driving the standard margin in each sector — whether it is the volume, average selling price or unit. We perform an intense, deep-dive analysis to try to see where we can help with our bottom line. At the end my workday, I usually write down a list of things that I need to do the next day. I will even “star” it if it is very important. At the moment, it seems like everything is urgent!
My job focuses on analyzing, concentrating heavily on revenue, standard margin and gross margin. I also focus on reporting as we do a lot of standard margin bridges to understand what is driving the standard margin in each sector — whether it is the volume, average selling price or unit. We perform an intense, deep-dive analysis to try to see where we can help with our bottom line.
At the end my workday, I usually write down a list of things that I need to do the next day. I will even “star” it if it is very important. At the moment, it seems like everything is urgent!
I am currently working from home, and always start off my day with coffee and exercise! To begin working, I will check all my unread emails, then review and complete a daily sales dashboard, which reports revenue changes from yesterday. I then distribute the report to all the leadership team members, which takes around 30 minutes. After sending the report, my day is filled with analysis, mainly because we do a lot of preparation for meetings to present our yearly result and outlook: profit and loss (P&L) statements by divisions, comparison against the forecast and prior year, and budgeting. I have various meetings throughout the day. For example, the program manager will call me to talk about the standard margin because they want to understand more about how it calculates. I am usually reporting at a group roll-up, but the product managers or business directors look at SKU-level data. Everyone in business operations is my internal stakeholder.
In addition to the quarterly forecast, I also do a weekly mini-forecast. I meet weekly with individual business unit managers to try to understand whether any extraordinary activities are affecting our forecast, and then update it based on that information. I do the monthly reporting pack, including variance analysis and standard margin analysis. Receiving the information ASAP is crucial, and it is important that I interact with different stakeholders to understand what is driving the margins. We are currently working closely with the supply chain team to understand the drivers and how we can manage the costs to ensure our gross margin.
1. Executive summary of the KPIs actual performance vs. plan and vs. prior year 2. Sales performance by product, country and region 3. Profitability analysis by product and by country 4. Operating expense (OPEX) tracking by function 5. Headcount tracking 6. Monitoring risks and opportunities; and 7. Working capital aging analysis.
1. 2. 3. 4. 5. 6. 7.
See the unique journeys several different FP&A leaders have taken.
A career is seldom a ladder of vertical promotions in one office, but rather a network of direct and indirectly related moves.
Ken Fick
Johan Van Zyl
FPAC, Senior Vice President of Data and Process Automation and COE Director, Marsh McLennan
“The first lesson is to always put your hand up. Whenever I progressed, it was because I put my hand up to ask for or volunteer for assignments, especially when somebody else was not willing or able to.
Get out from behind the desk to engage your business in understanding the market, the customers and the competitors — be externally focused. Be curious and do not accept things at face value. Be a catalyst for change: agile and adaptable. Speak out, respectfully.
You can work extremely hard and prove yourself capable, but often people remain in a position because other people love them in that role. If you don't raise your hand when the opportunity arises, you're never going to move up.”
• • • •
Tracy Butler
Weng Hong Yon
Keyur Shah
CFO, ePacs Flexbiles
“In the early stage of your career, people really focus on the quality of your work. You've got to learn the basics; you've got to know how to walk before you can run. Gather the right certificates, learn the right skills, and get the right training.
Then, as you move up in your career, the soft skills really start to come into play. They become even more important if you want to advance because if you do not have the skills to communicate, then it doesn't matter how solid your technical skills are. If you cannot build trust and relationships, you cannot get better insight and support the customer in the mission. If you don't have some leadership skills, you cannot really manage people and move forward in your career.”
FPAC, Executive Director, City Mental Health Alliance and Fellow, Singapore Center for Social Enterprise
“Having played the FP&A role in a regional leadership capacity, transforming the traditional management accounting function to active business partnering, I’ve come to recognize the importance of a few key tactics all FP&A professionals should engage in:
There’s more to it than the technical skills of accounting and data crunching. FP&A plays a unique role in converting accounting or technical financial language into a meaningful business story that makes sense to any businessperson.”
Senior Finance Director, FP&A COE, APAC, Johnson & Johnson
“In terms of developing talent in FP&A, we have a very robust onboarding plan for all the new employees. We have orientations they have to go through for the first seven days, 30 days, 60 days, and 90 days. Then, once people are in a team, we encourage them to get a different certification, including an FP&A certification.
We also encourage our people to build digital skills in four brackets. First is automation, second is visualization and storytelling, third is diagnostic. And the fourth bracket is what we call “advanced analysis”; it’s more about scenario planning and also a certain statistical regression modeling.
Vice President, FP&A, Berkeley Research
“I thrive in the art of the possible. FP&A is the only area I know that allows me to be curious, to learn, teach, influence, observe and directly see the effects on a single enterprise. Having great ideas and producing good work means nothing if you cannot communicate it effectively to the people that matter and effectuate change.
The best FP&A professionals I know travel a winding road. They tend to have a high comfort level with ambiguity and are able to hone their business skills through flexibility, increase their tolerance of uncertainty, and most importantly, they very rarely say no to new opportunities. Confidence only comes from trying and knowing that whatever the outcome, you know you can make it work.”
Auditor
Systems integration & reporting
Finance manager
M&A integration
Regional FP&A leader
Financial Accounting
Management Accounting
M&A; deal dilligence, capital markets, IR, integration
Director, business control
Executive director (non-finance executive)
We want to play the role of talent incubator. We bring a lot of young talent into our group, develop them and protect them.”
Process automation lead, CoE
Management consultant
Treasury and risk management
Treasury, Risk Management and Revenue management
Head of FP&A
CFO
Data analyst
Commercial finance director
Supply chain leader
Head of FP&A COE
Regional CFO
Finance rotation
Forensic accounting consultant
Managing director (non-finance executive)
Strategy and transformation consuting
VP, FP&A
