To grow successfully, every business needs to be able to look ahead. That’s where financial planning and analysis (FP&A) comes in. At a time when informed business decisions are more important than ever, we examine FP&A and its increasingly important role.

What Is FPA and What Does It Do?

FP&A’s job has traditionally been to record and report financial results, and to extrapolate future performance from historical data. Today, the function has become more strategic and future-focused as vast quantities of data–and more powerful analysis tools–empower FP&A teams to provide more insightful decision support.

Here are five key FP&A responsibilities and functions:

  1. Building the P&L. FP&A teams collect data from around the company, then verify and consolidate it to create the P&L statement along with financial indicators such as the debt-to-equity and current ratios.
  2. Understanding profit margins. It’s often FP&A teams that drill down into financial statements to understand the relative profitability and performance of different products, services and departments.
  3. Planning the budget. How should cash be allocated? That’s another key FP&A responsibility. Teams will create models that take into account trends in the company, its industry and the broader economy. Once an annual event, budget planning is becoming a continual, real-time process, thanks to modern data analysis tools.
  4. Scenario planning. Here, FP&A professionals outline a range of possible outcomes—such as optimistic, baseline, and pessimistic cases—by adjusting figures for, say, sales and order volumes to assess their effect on the company’s financial outlook. These insights can help determine actions to take under various circumstances, giving the business a stronger footing for future planning.
  5. Management reporting and ad-hoc reporting. FP&A teams typically pull together the regular financial reports that help guide management decisions, alongside on-demand reports that zero in, for example, on a specific KPI or department.

FP&A Teams and Roles

Not every business has an FP&A role. At smaller businesses, it might just be one aspect of a financial controller’s job–while at larger enterprises, there may be multiple FP&A professionals reporting to a CFO or even to a head of the function. FP&A is potentially an attractive move for finance professionals looking for a new challenge.

The discipline typically becomes more important as organisations add locations, subsidiaries and geographies.

Common FP&A roles and responsibilities include:

Corporate financial analyst FP&A manager Director/VP of FP&A
  • Forecast using financial data and models
  • Track and evaluate financial performance
  • Produce on-demand reports
  • Set policies and procedures
  • Formulate long- and short-term plans with the leadership team
  • Analyse financial and operational performance
  • Help business units build forecasts
  • Make recommendations that lead to more efficient operations
  • Set and own the process for financial budgeting, modelling and planning
  • Analyse results to identify recommendations for senior management
  • Partner with IT to improve automation and optimisation
  • Drive improvements in reporting

Skills and Tools Needed for FP&A

Successful FP&A functions need individuals who have strong financial and business partnering skills and are equipped with the latest tools.

  • Key FP&A skills. FP&A professionals are highly numerate and comfortable working with complex data sets from across departments. They need strong skills in tools like Microsoft Excel and a good understanding of ERP systems to organise, analyse, and report on financial data. Equally important are business partnering skills—the ability to collaborate across teams, understand different departmental needs, and communicate insights clearly. Strong problem-solving capabilities are also essential, particularly when it comes to consolidating and reconciling complex financial data.
  • Important FP&A tools. The one thing that slows down FP&A teams is finding data. Without easy access to data from across departments, they can easily spend far too much time tracking down the financials and metrics they need. And if they rely on spreadsheets, it slows down processes and increases the risk of error. On the other hand, with a planning and budgeting solution linked in real time to the ERP, FP&A teams can speed up planning cycles, create more accurate forecasts and elevate the decision-making power of leadership teams.

Integrated with NetSuite ERP, NetSuite Planning and Budgeting automatically pulls accurate, up-to-the-minute information, removing any need to depend on spreadsheets. With all necessary data in one place, everyone can be confident of accurate data and meaningful projections. NetSuite Planning and Budgeting uses historical data and industry-specific models to predict future results, making forecasts more accurate.

With the right tools, FP&A teams can maximise the advantage they give to the business.