What is FP&A?

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Financial Planning and Analysis (FP&A) is the function within the finance organisation responsible for budgeting, forecasting, long-range planning, and business performance analysis. It is the forward-looking counterpart to accounting and finance operations — while accounting records what happened, FP&A focuses on what is going to happen and why performance is deviating from plan.

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FP&A teams work closely with business unit leaders, the CFO, and the board to translate financial data into strategic insight.

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What FP&A does

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The core activities of FP&A include: building and maintaining the annual budget and rolling forecasts, producing the management reporting pack (revenue, costs, margins, working capital), performing variance analysis to explain deviations from plan, building financial models to support investment decisions, and providing scenario analysis for strategic planning.

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The dependency on finance operations

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FP&A is only as good as the data it works with. If actuals close late, if reconciliations are unreliable, or if the GL contains errors that haven't been corrected, FP&A analysts spend most of their time cleaning data rather than analysing it.

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This is why the quality of finance operations — the close cycle, reconciliation accuracy, management reporting infrastructure — directly determines the impact that FP&A can have. When the close takes ten days and actuals are available on day twelve, the FP&A team has two weeks of the month left to turn analysis into decisions. When it takes three days, they have three weeks.

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Related: Budget vs Actuals · Management Reporting · Variance Analysis · Office of the CFO