Financial planning and analysis (FP&A) are a group within a company’s finance organization that provides senior management with a forecast of the company’s profit and loss (income statement) and operating performance for the upcoming quarter and year. These forecasts inform management on the progress and effectiveness of the company’s strategic plans and investments. They also enable management to communicate with external stakeholders.
Standard Job Description:
The task of forecasting a company’s financials requires both an understanding of the company’s historical performance as well as an understanding of the key assumptions and trends that may impact future performance. This requires a broad understand of both accounting and business operations. As a result, FP&A teams are in frequent contact with all areas of the enterprise including operations, sales, marketing, treasury and accounting.
FP&A’s role as the “eyes and ears” of the organization makes it a central liaison between the corporate and operations teams. As such, FP&A interfaces with the CEO as well as the CFO.
FP&A’s primary responsibility is to connect senior management’s long term “strategic plan” to reality. The strategic plan is a top-down, senior management driven document that sets high-level targets (revenue, net income, core strategic initiatives, etc.) for the firm anywhere from 2-10 years in the future. FP&A’s job is to develop the operating and financial plan required to achieve management’s strategic plan. This process is also known as corporate performance management. As a key part of the forecasting process, FP&A teams conduct variance analysis to show
management how the budget and/or rolling forecast compares against actual performance.
FP&A not only reports forecasts and variances but also uses that data to advise management on decisions such as how to improve performance, minimize risk or capture new opportunities from both within the company and within the external environment. To this end, the FP&A team is typically charged with the creation of a monthly “CFO” or “Senior Management” book that usually provides:
· Analysis of historical financials
· Variance explanations
· An updated forecast with risks and opportunities to current plan
· Key Performance Indicators (KPIs)
At its best, the report provides the CFO with enough information to answer key questions from external stakeholders and may identify various levers that can be pulled to optimize performance or meet certain goals.
FP&A will inevitably be pulled in to work on special projects. Examples vary from company to company and can include:
· M&A: Identifying potential acquisition targets, buy-side support, integration and divestitures.
· Process optimization: A perennial problem for large organizations is workflow inefficiency that arises when various technical systems and tools don’t “speak to each other” well. Resolving this often requires time consuming manual intervention. Because FP&A teams find themselves in the middle of these process inefficiencies, they are often the ones tasked with improving them.
· Market research: Determining the size of a given market, leaders, laggards and potential opportunities in which the organization may have a competitive advantage.
· Capital allocation: How much of and on what should the organization’s capital be spent.
For public companies, the role of FP&A is particularly important because management teams often provide revenue and net income guidance to shareholders based on the budget and forecasts prepared by the team. Getting these forecasts wrong not only prevents management from
accurately allocating resources and achieving its strategic plan, but also has a direct and immediate impact on a company’s share price.
Key Job Responsibilities:
1. Working closely with the leadership team to formulate the business’s medium to long term financial and strategic plan.
2. Work with Business Unit heads to build their annual budgets and forecasts.
3. Producing models to project long term growth and determine the impacting business factors.
4. Delivery of competitor analysis, market trends and associated commentary to the Leadership team.
5. Analyzing financial and operational results to better understand company performance.
6. Utilizing BI tools to delivery meaningful insights into business performance.
7. Communicate to senior management the reasons behind the product/department performance and results.
8. Provide detailed analysis and commentary on cost center results.
9. Reviewing operations and recommending new productivity or cost saving initiatives.
10. Preparing business cases to support new investment, strategic and other business decisions.
11. Reviewing existing processes and procedures to develop recommendations for improvement efforts.
12. Evaluating previous budgets, expenditures to develop and implement future budgets.
13. Communicating results and recommendations to senior management for improvements that will lead to cost reduction, revenue generation and streamlining operations.
14. Provide insights to senior management around financial modelling, forecasts and profitability.
15. Managing a team of Financial and Business Analysts.
1. Experience of Financial Control Mechanisms.
2. Significant analytical skillset, including the utilization of BI and reporting tools.
3. Strong Quantitative abilities.
4. Experience with Global Financial Planning & Analysis and Audit.
5. Advanced computer software skills, including writing macros in Excel, Power BI and other accounting packages.
6. Expert in data or financial modelling skills.
7. 5+ years of directly related finance experience in progressively responsibility.
8. Knowledge of the principles of cost accounting and activity-based costing.
9. Demonstrated ability to design financial & non-financial measurements and key performance indicators (KPI’s) to drive improved business performance.
1. Bachelor’s degree required, with a concentration in one of the following disciplines: Finance, Accounting or Economics
2. Post-secondary degree in Finance, Accounting, or related field.
1. Certified Financial Planner (CFP)
2. Financial Risk Manager (FRM)
3. Financial Modeling and Valuation Analyst (FMVA)
4. Chartered Accountant (CA)
5. Certified Public Accountant (CPA)
6. Chartered Financial Analyst (CFA)
Finance/Budgeting Manager, Finance, Financial planning, Budgeting, Variance analysis, Financial analysis, Accounts, Taxation, Audits, Financial Modelling, Financial Forecasting, Fund Management, Cash Flow Analysis, Corporate Finance.
1. FP&A Manager
2. Finance Manager
3. Financial Planning and Analysis Manager
4. Finance and Accounting Manager
Screening Questions/Assessment Parameters:
1. Experience with Financial Planning & Analysis and Audit, Business Analytical skills.
2. Experience of Financial Control Mechanisms.
3. Experience in Advanced computer software skills, including writing macros in Excel, Power BI and other accounting packages.
1. Accounts Payable. This speaks to your private company’s commitments to pay obligations owed to loan specialists, providers, and lenders.
2. Accounts Receivable. These records are marked as resources since they speak to a lawful commitment for the client to pay you money for their transient obligation.
3. Asset. This business account key term is whatever has esteem—regardless of whether unmistakable or immaterial—and is possessed by the
business is viewed as a benefit.
4. Balance Sheet. The report is a rundown of the business assets and liabilities.
5. Cash Flow Statement. Income reports reflect action for a predetermined period, typically one bookkeeping period or one month.
6. Income Statement. It is additionally called a benefit and misfortune proclamation, and it tends to the business’ main concern, detailing how much the business has earned and spent over a given period. The outcome will be either a net addition or an overall deficit.
7. Liability. This business account key term is a lawful commitment to reimburse or in any case settle an obligation.
8. Accruals. A business account term and definition alluding to costs that have been acquired however haven’t yet been recorded in the business books. Wages and finance charges are normal models.
9. Debt. An entirety of cash that is owed or due.
10. Liquidity. Liquidity is a pointer of how rapidly a benefit can be transformed into money for full market esteem.
1. Cash Flow Projections. Future business choices will rely upon your informed income projections. To prepare for forthcoming consumptions
and working capital, you must rely upon past income designs. These examples will give you an extensive gander at how and when you get and go through your money. This data is the way to open educated, exact income projections.
2. Depreciation. The estimation of any benefit can be said to deteriorate when it loses a portion of that esteem in increases after some time. Depreciation happens because of mileage. Different techniques for deterioration are utilized by organizations to diminish the recorded estimation of benefits.
3. Business Credit Report. Much the same as you have an individual credit report that banks take a gander at to decide hazard factors for making individual advances, organizations additionally produce credit reports. These are kept up by credit agencies that record data about a
business’ budgetary history.
4. Debt Consolidation. On the off chance that your private company has a few credits with different installments, you should consider a business debt consolidation advance. It is a procedure that lets you consolidate numerous advances into a solitary credit.
5. Invoice Factoring or Financing. If your business has countless open solicitations extraordinary, you may contact a considering organization and have them buy the solicitations at a markdown. By raising capital along these lines, there is no obligation, and the figuring organization accepts the money related accountability for gathering the receipt obligations.
6. Line of Credit. A loan specialist may offer you an unbound measure of assets accessible for your business to draw on when capital is required. This credit extension is viewed as a transient subsidizing alternative, with a greatest sum accessible. This pre-affirmed pool of cash is
engaging because it gives you fast access to the money.
7. Merchant Cash Advance. A trader may offer a subsidizing strategy through an advance dependent on the business’ month to month deals
volume. Reimbursement is made with a level of the every day or week after week deals. These will in general be momentary credits and are probably the costliest approaches to finance your independent venture.
8. Retained Earnings. Much the same as it sounds, this term speaks to any benefits earned that are held in the business. This can likewise be alluded to as bootstrapping.
9. Financial Statements. The standard fiscal summary parcel incorporates four primary reports: the salary articulation, the accounting report, the announcement of income, and the announcement of investors’ value, on the off chance that you have investors.
10. Cost Benefit Analysis. A cost-benefit analysis is a procedure business use to break down choices. The business or expert wholes the advantages of a circumstance or activity and afterward subtracts the expenses related with making that move.