FAQs on Strategic FP&A: Process, People, and Systems

Emily Mason | Senior Content Writer

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This 3-part article explores frequently asked questions around FP&A, exploring the financial processes, people, and systems that maximize a business's financial and operational performance.

What is FP&A?

Financial planning and analysis (FP&A) is a strategic finance function in an organization. It combines financial planning, budgeting, forecasting, and analysis to help guide executives to make the right decisions for the business. An effective FP&A team positively impacts the company’s current health and future growth. FP&A plays a pivotal role in setting financial targets, monitoring performance, and identifying ways that a company can grow and create efficiencies in its operations.

Strategic finance vs FP&A: what's the difference?

Is FP&A accounting or finance?

Typically both FP&A and accounting fall under the umbrella of finance, but FP&A is distinct from accounting - mainly in its focus. Accounting focuses on recording and reporting historical financial transactions, and maintaining a viable cost structure. FP&A is forward-looking. While it still uses historical data, it does so to forecast future financial outcomes and inform strategic decisions.

Part I: FP&A Process

What is the typical FP&A process cycle?

The FP&A process cycle typically consists of:

  • Budgeting: Setting financial targets and allocating resources for the upcoming period. This part of the process involves collaborative financial planning with various departments to establish a comprehensive budget that aligns with the strategic business goals.
  • Forecasting: Frequently updating financial projections based on current trends and market conditions. As business is constantly changing, this part of the process allows for adjustments, so that financial forecasts remain relevant and accurate to the business.
  • Reporting: Analyzing actual financial results compared to budgets and forecasts. This step involves generating detailed reports that highlight variances and key performance indicators, providing a clear picture of the organization's financial health.
  • Analysis: Providing strategic insights and recommendations to improve financial performance.  This involves delving deeper into the data to identify underlying trends, opportunities, and risks, and offering actionable advice to guide future strategic decisions.
  • Collaboration: Engaging with stakeholders across the organization to gather input, share findings, and align financial planning with overall business objectives. Effective communication and collaboration are crucial for ensuring that the FP&A process supports strategic decision-making and drives organizational success.

Let’s look at each of these steps in the process in a little more detail and answer some top questions for each.


What is the purpose of budgeting in the FP&A process?

Budgeting sets financial targets and allocates resources for the upcoming period. It establishes a financial framework for the organization's strategic goals, ensuring that resources are allocated efficiently and effectively to support business objectives.

How is the budgeting process typically conducted?

The budgeting process involves collaboration between the FP&A team and various departments to estimate revenues, expenses, and capital expenditures. It often includes reviewing historical data, analyzing market trends, and incorporating strategic initiatives to create a comprehensive budget. An FP&A planning tool increases efficiency in this process, ensuring that all critical business data is synchronized and accurate as it’s being used to budget.


Why is continuous forecasting popular?

Continuous forecasting is popular because regular updates based on real-time data ensure that financial projections remain relevant and provide accurate guidance for decision-makers. Many FP&A teams are shifting to continuous forecasting to adapt to changes in their business environment, market conditions, and organizational strategies.

What techniques are used in financial forecasting?

Financial forecasting can employ various techniques, including trend analysis, regression analysis, and scenario planning. The choice of technique depends on the complexity of the business, the availability of data, and the specific goals of the forecast.


What is the importance of reporting in the FP&A process?

Reporting provides a detailed analysis of actual financial results compared to budgets and forecasts. It helps identify variances, track performance, and assess the financial health of the organization, enabling informed decision-making.

What types of reports are commonly used in FP&A?

Common FP&A reports include income statements, balance sheets, cash flow statements, variance analysis reports, and key performance indicator (KPI) dashboards.


How does analysis contribute to the FP&A process?

Analysis offers strategic insights and recommendations to improve financial performance. It involves examining data to identify trends, opportunities, and risks, and providing actionable advice to optimize financial outcomes and support strategic decisions.

What tools and techniques are used in FP&A analysis?

FP&A analysis often uses tools such as spreadsheets, financial modeling software, and business intelligence platforms. Techniques include ratio analysis, sensitivity analysis, and what-if scenarios to evaluate the potential outcomes of different business decisions.


Why is collaboration essential in the FP&A process?

Collaboration ensures that the FP&A process is aligned with the overall business objectives and that financial planning incorporates input from various stakeholders. It fosters a shared understanding of financial goals and enhances the quality of decision-making.

How can organizations facilitate effective collaboration in the FP&A process?

Effective collaboration can be facilitated through regular cross-functional meetings, clear communication channels, and integrated planning tools that allow for real-time data sharing and analysis.

More on this topic: 5 Ways to Finally Achieve a Collaborative Budgeting Process

Part II: People in FP&A

It's all about business partnership and collaboration in strategic finance.

The success of the FP&A leaders is not solely dependent on the financial data and tools, but also on the people involved in the process. Collaboration and business partnership with key stakeholders is important to ensure that the FP&A function effectively supports the rest of the organization.

What is the role of business partnership in FP&A?

Business partnership in FP&A refers to the collaboration between the FP&A team and other business units or departments. Financial analysts act as a strategic partners, providing financial insights and analysis to support decision-making and drive business performance. For example, a strong business partnership can help align financial planning with business objectives, ensuring that financial resources are allocated efficiently to support strategic initiatives. This is an important factor in cross-functional and significant business activities like workforce planning, where finance, HR, and other stakeholders need to work together effectively.

50% of CFOs see C-suite collaboration and establishing finance as a business partner across the enterprise as a top priority. Business partnership is key to increasing the strategic value of the finance function. Support your finance team to implement stakeholder engagement plans to guide their communication and interactions with each business leader based on their level of investment and priorities.

Read more: Top 6 Focus Areas for Strategic FP&A Teams

How can FP&A teams foster strong business partnerships?

FP&A teams can foster strong business partnerships by actively engaging with business unit leaders, understanding their strategic departmental goals, and providing tailored financial analysis and insights to support their decision-making. FP&A teams have the opportunity to become the heart of strategic decision-making in the business through effective collaboration and coordination.

Why is collaboration essential in the FP&A process?

Collaboration is essential in the FP&A process to ensure that financial planning and analysis are integrated with the overall business strategy. It enables the sharing of insights, facilitates alignment across departments, and ensures that financial decisions are made with a comprehensive understanding of the business context. Fostering a culture of collaboration and partnership is key to maximizing the business impact of the FP&A function in 2024.

How can FP&A leaders facilitate effective collaboration?

FP&A leaders can facilitate effective collaboration by creating a culture of openness and transparency, where team members feel encouraged to share their insights and perspectives.

FP&A leaders should promote a collaborative budgeting process. Collaborative budgeting is a 'bottom-up' approach where department heads actively partner with the finance team to build a data-backed annual plan. It promotes accountability and ownership, improves accuracy, breaks down data silos, and positions FP&A as the strategic finance business partner. A collaborative budget is built with stakeholder input right into the plans, saving time for financial analysts and resulting in a more accurate, aligned, and realistic budget.

Implementing collaborative tools and platforms can also enhance communication and data sharing among stakeholders, making the FP&A process more efficient and integrated.

Read more on this topic: The Collaborative Budgeting Process Your Finance Team Needs.

What is a finance business partner?

A finance business partner (FBP) is typically a financial analyst that works closely with various departments to provide financial insights and support strategic decisions. They perform financial analysis, assist with budgeting and forecasting, monitor performance, and recommend improvements.

FBPs act as advisors to functional leaders and other budget owners in an organization, translating financial data into actionable insights and facilitating communication between finance and other departments. Their role integrates finance with business operations to drive better overall performance.

Part III: Systems in FP&A

What role do systems play in the FP&A process?

Systems are the technological backbone of the FP&A process, providing the tools and platforms necessary for data collection, analysis, and reporting. They enable automation of repetitive tasks, integration of data from various sources, and generation of real-time insights for informed decision-making.

What are some key features of modern FP&A systems?

  • Data Integration: Ability to connect with various data sources, such as ERP, CRM, and HRIS systems, to ensure data accuracy and consistency.
  • Scenario Planning: Tools for creating and comparing multiple financial scenarios to assess the impact of different assumptions on the company's future performance.
  • Dashboards and Reporting: Customizable dashboards and reporting capabilities that provide real-time visibility into financial metrics and KPIs.
  • Strategic Collaboration: Features that facilitate collaboration among finance teams and other business units, enabling a more integrated approach to financial planning.

For example, Stratify's platform is designed for collaborative stakeholder planning, offering real-time analytics of financial and operational performance through a user interface that all users can navigate easily. It also includes a "Tasks" feature, which allows finance teams to tag sales or marketing leaders, ask them questions, and direct them to input their data without exposing them to complex financial models.

Compare your options: Top FP&A Software Solutions for Your Company Size

How do FP&A systems contribute to the strategic finance function?

FP&A systems contribute to the strategic finance function by providing the necessary infrastructure for data-driven business strategy. They enable finance teams to move beyond manual processes and spreadsheet-based models, allowing for more efficient and accurate financial planning and analysis. By leveraging modern FP&A systems, finance teams can focus on delivering strategic insights and become a business partner to key stakeholders to help drive efficient company growth.

Take the next step to improve your FP&A function

FP&A is a critical function within an organization that encompasses a wide range of activities, from budgeting and forecasting to analysis and collaboration. By understanding the FP&A process, leveraging modern systems and tools, and fostering strong business partnerships, finance teams can support strategic decision-making and drive organizational success. As the role of FP&A continues to evolve, embracing innovation and adopting best practices will be key to support the executive team and staying ahead in the dynamic world of strategic finance.

Last Updated:
July 17, 2024

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