What is Strategic Finance?

The Stratify Team

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Strategic finance is an evolution of Financial Planning and Analysis (FP&A) that sees the finance function as the heart of effective decision-making and planning for the entire organization. Decisions are happening fast. Business leaders need accurate data from across the organization at their fingertips ready to leverage when opportunities arise. This approach helps the whole business to connect insight to action by enabling the two-way flow of financial and operational insights in real time. 

Learn more: 7 FP&A Trends to Watch 

Defining strategic finance 

Strategic finance is an approach to FP&A that focuses on how the finance team can become a vital partner to the business and drive success. Strategic financial planning and analysis views the process as an opportunity to: 

  • Unite the business in the planning process
  • Use all available data plus stakeholder expertise to create more accurate forecasts
  • Drive faster, informed decision-making.  

Operational engagement is often the missing link that holds teams back. Without FP&A leading the way and fostering connections, business units tend to lose sight of how their individual plans fit together and affect each other.

“A key differentiator of strategic finance is the ability to predict downstream outcomes and the possible impact of big decisions.” - Brian Camposano, CEO at Stratify 

Strategic finance embraces these critical components of organizational success:

  • Synthesized data from the whole organization that supports workforce planning and sales planning, not just financial planning
  • Timely analysis fed back to business leaders
  • Operational insights incorporated into plans
  • Collaboration and partnership
  • Agility and alignment

What is Financial Planning & Analysis (FP&A)?

FP&A, or the Financial Planning and Analysis function, sits within the finance department of a business. FP&A works alongside other finance teams like accounting & governance, and risk & compliance. The FP&A leader and team analyze financial and operational data in order to evaluate past performance. They incorporate those insights into future planning, budgeting, and revenue forecasting to inform business leaders and bolster the overall financial health of the business.

The FP&A function typically focuses on:

  • Gathering, verifying, and organizing data from all departments to be used in planning. 
  • Producing an annual plan for the business, and then reporting on actual performance against that plan (Budget vs. Actual, or BvA).
  • Analyzing financial and operational KPIs.
  • Creating bespoke reports for management and the executive team on financial and operational trends. 
  • Generating predictive models or multi-scenario plans to inform stakeholders of possible outcomes of different strategies. 
  • Supporting the HR team and business stakeholders in workforce planning with accurate, timely headcount reconciliation and forecasts with the latest information available.

What's the difference between FP&A and strategic finance?

In general, strategic finance describes an FP&A function that has become more forward-thinking, operationally focused, and proactive in partnership with the business. Some organizations may have a dedicated strategic finance leader or team separate from FP&A, who report to the CFO or Head of Finance. But any finance team can evolve to become more strategic over time, whether or not they have a dedicated team.

In a strategic finance future, FP&A takes a more central role in the business. Strategic FP&A unlocks the vital connection between finance and operations to build the future of the business, not to just keep the day-to-day running.

When you approach strategic finance as a mindset and priority shift, opportunities to be more strategic will pop up everywhere in your process. 

Here is a general comparison of the two:

Your Page Title
Traditional FP&A Strategic Finance
Backwards-looking reports Forward-thinking forecasts and scenario planning that incorporate operational data
Scattered data Unified data
Juggling multiple systems + spreadsheets Connected, powerful SaaS platform
Data-gathering & financial modeling Proactive strategic engagement
Finance leader is disconnected from decision-making Finance leader is valuable partner and driver of decisions and C-suite strategy
Financial analyst mired in tedious tasks Financial analyst are valuable partners to their colleagues

What's the difference between finance and xP&A?

Finance and xP&A are quite similar. A term coined by Gartner, stands for ‘Extended Planning and Analysis’. Think of it as company-wide planning that is orchestrated by Finance. Typically, workforce planning and sales planning - two operating areas that have the most impact on financial outcome – are the first to be integrated as an extension of financial planning.

If strategic finance is the overarching approach to corporate financial planning, xP&A is like the detailed strategy to apply those strategic finance principles to every department’s plans using advanced tools. It is an evolution of FP&A that takes a modernized, leadership approach to improve on established processes and effectively manage the complexity of modern business datasets and operations.

xP&A incorporates advanced analytics, operational data, and continuous forecasting to help the entire organization synchronize its plans and share real-time data. 

Much like strategic finance, xP&A aims to:

  • Connect the operational plans from every business unit to the financial plan.
  • Connect those plans to the strategic objectives of the business.
  • Orchestrate the reporting and planning process with a collaborative and transparent approach.

The problem with the status quo

There’s a lot at stake if finance teams are unable to become more strategic. Here are some top challenges finance teams are facing:

1. Too much time is spent on manual processes, leaving little time for strategy.

2. A struggle to orchestrate the production of a timely annual plan that’s informed by all stakeholders.

3. Stale data and error-prone manual financial analysis methods.

4. A struggle to collaborate & engage stakeholders in the planning process.

5. Unable to support quick pivots or sudden opportunities with data-informed advice and fast scenario building.

6. Finance is seen as irrelevant or only the gatekeeper to money, and left out of big decisions.

7. Accurate data to support workforce planning and strategic personnel decisions. 

8. Compliance and data security concerns over keeping financial data secure. 

Learn more about key challenges + solutions for strategic finance teams. 

What are the benefits of strategic finance?

A strategic finance function is a powerful asset to any business. Here are the top benefits of becoming more strategic:

1. Stronger connections across the business 

Finance can only be the heart of the business if it works hand-in-hand with other departments. Strategic finance teams are uniquely positioned to have a detailed understanding of operational KPIs and the challenges and opportunities for each business unit. A strategic finance team focuses on collaborative planning. They form plans and scenarios that are informed by real-time data from ERP, HRIS, and CRM systems and business intelligence directly from other stakeholders.

2. Finance proactively influences business strategy. 

A strategic finance leader has a seat at the table and helps to direct the business. Other leaders acknowledge and appreciate the impactful and accurate guidance that finance can offer. Strategic finance teams are relevant, collaborative, and vital to success.

3. Agility and visibility enable decisive leadership

No more blind decision-making – strategic finance teams bring insights from real-time access to operational and financial data so that the full picture is in view when options are on the table and time is of the essence.

4. An efficient + productive approach to FP&A

Leveraging modern, SaaS-based tools, strategic finance teams are able to spend less time on data reconciliation and modeling. Instead, they are free to be more proactive and focus on analysis and partnership with other business leaders to make better predictions.

5. Increased accuracy 

Strategic finance teams adopt next-gen FP&A tools to reduce the likelihood that errors and stale data will muddle up or delay their reporting and planning processes. 

Steps to strategic finance maturity 

  • Approach strategic finance as a journey. 

Break the process down into smaller steps and keep your goals in sight for each stage. Taking clear steps to streamline your processes, you can help shift your finance team to be the financial heart of the business.

  • Choose the right technology. 

An FP&A platform can automate many of the time-consuming and manual elements of data-gathering and reporting. This frees your time to improve agility, reporting frequency, and stakeholder partnership.

For example, Stratify will automatically join your business data from disparate systems (general ledger, HRIS, and CRM), enabling faster analysis. Most importantly, an FP&A tool gives access to real-time data, which is an essential part of strategic finance. You can’t bring unique insights to the business if you’re modeling and forecasting with stale or incorrect data.

FP&A tools can also offer increased forecasting sophistication, helping you identify possible operational changes that could translate to efficiencies and financial gains for the business.

  • Engage stakeholders in the process. 

Rethink your communication frequency, build real relationships with stakeholders, provide them with access to data, and make an actual plan for how to include them. 

Learn more: Getting Stakeholders Involved in the Planning Process

How does technology enable strategic finance? 

Emerging tools have dramatically reduced the time FP&A teams need to spend on the reporting and planning process. To be more effective, you must have access to real-time data from ERP, CRM, and HRIS systems, plus insight into operational KPIs. 

Many finance leaders have stacked multiple tools to achieve this. Or, you can opt for a platform like Stratify to join all that data together and then use configurable business logic and driver-based planning models to start forecasting with ease. 

Here are three categories of FP&A tools you should consider to find the best fit for your organization.

Three categories of FP&A software

Software solutions that streamline the work of FP&A generally fall in one of these three categories. Understanding these approaches can help you understand which vendors might be a good fit for your needs.

1. Software fully customized for your organization

These are bespoke models created to your specifications, and serviced by a professional services team. Generally, these solutions require significant setup time, training, and implementation fees. They offer the ultimate in customization for complex organizations, but often changes to models must be implemented by the provider for a fee. 

Examples: Workday Adaptive Planning, Pigment

2. Tools that integrate with Excel or Sheets

With these solutions, you continue to model and create your plans in MS Excel or Google Sheets. They augment Excel and Sheets by making automation, report sharing, and queries much easier. Best for organizations that place a high value on the modeling skills of their analyst team.

Examples: Datarails, Cube

3. Cloud-based models

These solutions deliver configurable, driver-based models, and can significantly reduce time to value.  You populate your business’ data and assumptions in the platform, and start generating forecasts and analysis right away. You no longer need to create and manage business logic, improving both speed and accuracy. Some solutions, like Stratify, make it easy to collaborate with business partners right in the platform. Best for organizations that want their analysts to focus on business partnership and delivering strategic insights that aid in decision-making.

Examples: Stratify, Jirav

Dive deeper into the differences between FP&A tools. Explore Top FP&A Software Solutions for Businesses of Any Size

Roles in the strategic FP&A team

The Finance Leader 

Director or VP of Finance, or CFO, based on organizational structure & size.

Key Responsibilities The Value of a Strategic Finance Approach
Financial Strategy + Planning + Decision-making
  • Develop and execute on business goals, opportunities for growth, and risk assessment. Plan, budget, and forecast for long-term growth + success.
You have the opportunity to share your unique perspective on operational and financial trends with data-driven guidance. You’ll gain a seat at the table to help steer the business in the right direction and earn the trust of other stakeholders.
Capital Allocation
  • Advise and decide how the business uses its resources.
Spending decisions can be clearly linked back to the annual plan and justified with accurate reporting.
Risk Management
  • Assess and manage financial risks that could affect performance.
Insights and scenarios are informed by a full-picture perspective that you bring to the decision-making process.
Financial Reporting and Analysis
  • Oversee the process of creating accurate and timely reports. Provide analysis and recommendations to leadership.
You’re freed from tedious, manual tasks to be more proactive because reporting has become self-service. Executives, stakeholders, and even the board are equipped with access to real-time financial and operational reports. You can shift your focus to analysis and partnership.
Managing the Finance Team
  • Guide and mentor the finance team, fostering a high-performing team that supports the company's strategic objectives.
The strategic finance approach expands the team’s scope of responsibility, requiring broader engagement to train and develop your team.

The Financial Analyst 

Key Responsibilities The Value of a Strategic Finance Approach
Support CFO
  • Help ensure that the business is stable and profitable.
Strategic finance analysts spend less time on data reconciliation and modeling. Instead, they focus on the story the data is telling and data-driven predictions that can be made. They support the CFO by offering unique and cross-departmental insights from the time they spend collaborating with other business partners.
Financial Planning + Forecasting
  • Build models and assist with forecasting. Analyze data and market trends, and help create forecasts and scenarios for the business.
A strategic finance approach frees analysts from modeling with time-saving automations. They can use the time to deeply understand the business and spot opportunities for growth or pivot.
  • Prepare reports to share with stakeholders, executives, the board of directors, investors, and banks.
Reporting becomes a much simpler process, informed by integrated ERP, CRM, and HRIS data. Instantly refresh dashboards and generate reports for stakeholders. Focus shifts from report generation to identification of insights.
Support Compliance
  • Ensure that reporting and compliance requirements are followed.
Next-gen, strategic FP&A tools deliver high levels of security and access control, ensuring stakeholders see only the data they are supposed to.

Strategic finance FAQ

Why is strategic finance important?

Strategic finance is important because it's a mindset that's essential to succeed in modern business. Businesses are trying to achieve more (often with fewer resources) and their volumes of financial and operational data are growing exponentially. When FP&A teams embrace a strategic finance mindset, they can synthesize this data and connect the dots between financial and operational drivers for more accurate forecasting and informed decision-making. Strategic finance promotes a collaborative approach to planning processes, driven by real-time data insights. This is how FP&A can ensure that strategic financial planning is directly connected to business goals.

What are the top areas FP&A teams should focus on?

Here are five key areas to focus on as you become a more strategic FP&A team. 

  1. Data: The methods you use to gather data, synthesize, and organize data. Having real-time data at your fingertips and using it to make informed decisions.
  2. Collaboration: The depth of connection and coordination between finance and other parts of the business. 
  3. Agility: The ability to quickly synthesize data, create reports & forecasts, and revise or pivot to serve business needs.
  4. Reporting and Forecasting Frequency: Establish your unique cadence for reporting that’s responsive to business changes and industry or market trends and events. 
  5. Technology: The digital infrastructure and tools used to support your FP&A function.

How can a strategic finance team support business leadership? 

A strategic finance team can support business leadership by running a coordinated annual planning process, enabling scenario planning for "what if" questions, delivering timely financial reports and forecasts, and adapting to the CEO's preferences for engagement. This approach will build trust, encourage innovation, and integrate finance deeply within the strategic decision-making framework.

Learn more: What Does Your CEO Need From the FP&A Team?

What challenges can FP&A software solve?

  1. Streamline reporting - FP&A software automates financial and operational reporting, enabling teams to generate accurate and real-time reports with just a few clicks.
  2. Enhanced budgeting and forecasting - FP&A software offers advanced modeling capabilities, enabling you to create dynamic, scenario-based forecasts that consider changing market conditions.
  3. Faster decision-making - FP&A software integrates data from various sources, providing a holistic view of your organization's performance. Take this insight to optimize your performance and act quickly ahead of competitors. 
  4. Facilitates collaboration - FP&A software fosters collaboration by centralizing data from all departments, providing access to real-time reports and analysis, and gathering planning inputs from stakeholders within the software itself. 
  5. Promoting compliance and data security - FP&A software incorporates robust security features, reducing the risk of inappropriate data exposure and fraud.

How do I know if my finance function is strategic? 

It’s helpful to imagine a progression from the early stages to becoming a mature strategic finance team. An honest assessment of your team’s strategic level will sharpen your focus on what habits to implement next and where to challenge yourself as a finance leader. 

Our FREE Ebook, The Finance Leader's Guide to Scaling Strategic Finance, identifies three stages of strategic finance maturity and is full of practical tips and inventory questions to help you assess your level and take proactive steps to the next one. Download your copy. 

What will FP&A look like with the growth of AI?

There are definitely rumblings of a future where AI and deep learning take FP&A to a more strategic level. An AI-enabled FP&A tool can digest all of your data inputs and begin to notice trends. It can then bring insights to your attention and highlight areas to focus on. At least to start, AI automation features can streamline tasks like data entry, report generation, and trend analysis. 

How does FP&A support corporate strategy?

Financial Planning and Analysis (FP&A) supports corporate strategy in several ways:

  • Providing Data-Driven Insights: FP&A teams analyze financial data and market trends to offer insights that inform strategic decision making. Through understanding the financial implications of various strategic options, FP&A helps CFOs and Financial Leaders make data-driven choices that align with the company's goals.
  • Budgeting and Forecasting: FP&A is responsible for creating budgets and forecasts that reflect the company's strategic objectives. These financial plans ensure that resources are allocated efficiently through expense and workplace planning. Regular forecasting helps the company adapt to changes and stay on track to meet its strategic targets.
  • Performance Monitoring and Analysis: FP&A tracks key performance indicators (KPIs) and other metrics to monitor the company’s progress toward its strategic goals. They analyze and share financial reports, while providing insights into key areas that need improvement.
  • Scenario Planning and Risk Management: FP&A teams conduct scenario planning to evaluate potential risks and opportunities. By modeling different scenarios, they help the company prepare for various future possibilities, enhancing strategic flexibility and resilience.
  • Strategic Communication: FP&A helps articulate the financial aspects of the corporate strategy to internal and external stakeholders. Clear communication of financial plans and performance builds confidence among investors, employees, and other stakeholders, supporting the overall strategic vision.
  • Capital Management: FP&A manages capital structure and funding strategies to ensure that the company has the financial flexibility to pursue its strategic goals. They analyze debt, equity, and other financing options to support long-term strategic initiatives.
  • Supporting Operational Strategy: Beyond high-level corporate strategy, FP&A supports operational strategies by linking financial planning with operational planning. Ensuring the correct technology and platforms are being utilized for effective planning and stakeholder engagement.

Related resources

FP&A Trends & Practices: 

5 Ways to Finally Achieve a Collaborative Budgeting Process - Go from an endless, messy budgeting process to a truly collaborative process where plans are created and supported by every stakeholder.

Financial Planning & Analysis Top 7 Trends Worth Watching in 2024 - This article covers top trends and best practices that are prevalent in 2024. 

How to Increase the Strategic Value of Your FP&A Reports: Overcome These 4 Challenges - Start out mired in manual processes. Move to analyzing performance metrics, identifying key insights, and making strategic decisions.

5 Ways to Engage with Operations and Improve the Strategic Value of Finance - Take the maturity of your FP&A team to the next level by collaborating with the business and incorporating their KPIs into financial planning and analysis.

Step Out of Your Comfort Zone: Advice for the Financial Analyst’s Journey to Strategic FP&A - Financial analysts are so good at shining the spotlight on others that it can be hard to take risks in stakeholder relationships. Ultimately, embracing a bit of discomfort can lead to remarkable growth and opportunities. Quy Dong, Stratify Head of Customer Success, shares strategies and tips from her journey.

The Planning Season Calendar Template & Best Practices You Need Right Now - Do you have scars from previous planning cycles that were a disorganized mess? It doesn’t have to be that way. Use our customizable template to put guardrails on your planning process and change your approach to budget season.

Budget Variance Analysis (BvA) for Strategic Finance Teams - Use this routine FP&A practice to improve your predictions and support your business with strategic suggestions to pivot or respond. This article reframes BvA through a strategic finance lens.

Why FP&A Teams Choose Driver-Based Planning - Explore the top 5 reasons that strategic finance teams choose driver-based tools for workforce & expense planning. Common thread? More time for analysis and business partnership.

What It's Like to Model in a Driver-based FP&A Platform (Hint: You'll Never Pay a Consultant Again) - Take a look inside driver-based modeling with Stratify for a fast and flexible planning process, no expensive consultants required.

Older Planning Tools Block Business Partnership According to FP&A Leaders - When asked "Does inadequate technology limit your ability to impact the business?", 42% of mid market FP&A leaders said, "Yes." However, that number soared for those working in older technology.

New: Better Plans, Better Decisions with Multiple Financial Planning Categories - Stratify announces Dimensions, unlimited accounting segments and planning categories, to enable FP&A teams to consider all variables that impact decision-making.

Headcount Reconciliation & Workforce Planning Tips for Finance Teams: 

What is Workforce Planning for Finance? - The ultimate overview of workforce planning from the finance perspective. Learn more about the role of each department and how you can orchestrate a better process.

Overcoming Challenges of Headcount Reconciliation with Best Practices - This article explains the importance of collaboration between finance and HR to support accurate and timely headcount reconciliation. 

The Top 5 Workforce Planning Tools for Strategic Finance - If you're ready to streamline your headcount planning process, this article walks through the top 5 choices tailored to your business needs and size.

Strategic Workforce Planning: 5 Tips for FP&A Professionals - Practical tips to improve the speed and accuracy of your workforce planning process, and achieve stakeholder alignment too!

5 Workforce Planning Trends and How FP&A Teams Can Confidently Respond - Explore 5 emerging trends are changing the future of the workforce planning process, including AI, the rise of the contractor, and looming skills gaps.

Strategic Finance: 

What Does Your CEO Need From the FP&A Team? - Leading a business can be a noisy and lonely job. CEO Brian Camposano shares how FP&A can be the CEO's secret weapon and biggest supporter in four specific ways.

eBook - The Finance Leader's Guide to Scaling Strategic Finance - This comprehensive and practical guide helps you to assess your starting point and take confident next steps to grow as a strategic finance leader. We’ve taken your challenges and responsibilities into account at each stage, laying out a roadmap to greater alignment and agility. 

Becoming a Strategic Business Partner: The New Financial Analyst Skillset - This article summarizes the opportunities for financial analysts to pivot and improve their ability to partner with the business by investing in key skills. 

How Finance Can Get Stakeholders Involved in the Planning Process - Put an end to your frustration with 5 practical ways to meet stakeholders where they are and get the collaboration you need. Plus, we share a template for creating your stakeholder engagement plan.

What It Means to Make FP&A the Financial Heart of the Company - What do FP&A and a heart have in common? Answer: delivering vital resources to help the whole system thrive. Our CEO Brian Camposano unpacks how your FP&A team can be the financial heart of your organization. 

The Top Three Challenges to Becoming a Strategic Finance Team - Messy manual processes, stale and inconsistent data, and a lack of collaboration…sound familiar? We outline 3 strategic solutions to your biggest FP&A challenges.  

Your FP&A Team is Spending Too Much Time Modeling. Here’s Why - Is your FP&A team stuck in spreadsheets? Nate Skelton, Stratify VP of Product Management challenges financial analysts and finance leaders to reconsider where they use their energy and to spend more time on high-value activities.

Top 6 Focus Areas for Strategic Finance Teams - it's hard to make concrete progress with a subjective goal like "become more strategic." This article covers six areas where your FP&A team can get real traction with sharper focus and practical changes.

The Value of Strategic Financial Planning: Unlocking Business Success - Successful organizations know that strategic financial planning is the best approach to survive current economic uncertainties – plus it adds business value in some surprising ways.

Scenario Planning 101: How to Speed Up This Strategic FP&A Process - FP&A teams are under pressure to deliver accurate, validated scenario planning...fast. Scenarios can be a struggle, so learn how to deliver confident and collaborative version plans to your stakeholders.

Last Updated:
July 17, 2024

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