What is Strategic Finance?

The Stratify Team

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

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:

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 advice
Finance leader is disconnected from decision-making Finance leader is valuable driver of decisions and C-suite strategy
Financial analysts mired in tedious tasks Financial analysts are valuable partners to their colleagues

Are Strategic Finance and xP&A the same? 

They are similar. xP&A, 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. 

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. 

  1. 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. 

  1. 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.

  1. 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.

  1. 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 it 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

  1. 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 

  1. 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

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.


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.

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 CFO’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. 

Table of contents: 

1. What is Strategic Finance?

     A. What is FP&A?

     B. Strategic FP&A vs Strategic Finance

2. Challenges of Traditional Finance/FP&A 

3. The Problem With the Status Quo

4. Benefits of Strategic Finance 

5. Steps to Grow in Strategic Maturity 

6. The Role of Technology in Strategic Finance 

7. Roles in the FP&A team

8. FAQ

9. ‘All Things’ Strategic Finance (or FP&A)

All Things Strategic Finance

FP&A Trends & Practices: 

Financial Planning & Analysis Top 7 Trends Worth Watching in 2023 - This article covers top trends and best practices that are prevalent in 2023. 

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. 

Headcount Reconciliation: 

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. 

Strategic Finance: 

eBook - The CFO’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.   

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