What is FP&A?

Financial planning and analysis (FP&A) covers vital activities that help keep a company financially healthy. Think planning, budgeting, integrated financial planning, management and performance reports, and forecasting.

But what if a big company decides not to bring on a highly skilled FP&A and just sticks to its own methods to drive the company’s financial performance? It’s like driving the future of the company with just a rearview mirror. Sounds like a recipe for disaster, doesn’t it? You can’t really aim for growth without the mix of real data, forecasts, and the ability to adapt to changes. That’s why 68% of FP&As believe that problem-solving and decision-making skills are valuable in finance, especially for leadership roles.

With FP&A, the company can better connect strategy with action for improved performance. It is the key to backing major business moves and financial health to boost shareholder value. Using both current and historical data, FP&A pros work on crafting financial models that predict revenue, expenses, profit, and cash flow. They consider upcoming business moves and wider industry trends.

Why is FP&A Important?

Knowing that forecasts and economic predictions aren’t flawless, the FP&A team builds scenario models for expected, best-case, and worst-case situations, laying a foundation for actions. This helps senior executives and corporate development teams to come up with smart strategies. Continuously reporting on performance is another important task, usually tied to meeting regulatory requirements and leadership discussions on a regular basis like monthly, quarterly, and annually.

The FP&A function has come a long way! It used to be all about historical financial results and projections, but now it’s all about using advanced data analysis and predictive modeling to shape the company’s strategic plans directly. Unlike accounting, which checks out historical data to assess the current financial status, FP&A focuses on forward-looking data to predict future outcomes. It’s an integral part of strategic planning for any organization.

What’s the Deal with FP&A?

FP&A practitioners have a lot on their plate, handling many important tasks that guide their organizations. Here are some key responsibilities:

Four Roles of FP&A


For a business to run smoothly, decision-makers rely on getting the right financial information at the right time. That’s where FP&A comes in – they handle creating and sharing these insights with management using reports and dashboards.


In FP&A, budgeting and forecasting are like the backbone, while financial analysis is the lifeblood. Financial analysts use data-driven insights to give decision-makers a solid grasp of past performance and future possibilities. It’s interesting that a study from 2022 found that 67% of finance experts actually spend a lot of time on data analysis and scenario planning.

Variance analysis is also crucial to FP&A, where actual results are compared to what was budgeted or forecasted to uncover reasons for any deviations and how they could impact future performance. FP&A experts also create and keep an eye on Key Performance Indicators (KPIs) to measure the financial and operational health of the organization, pointing out areas that need more focus or improvement. 


To excel in their roles, FP&A professionals really need to understand how their organization ticks and its financial well-being. This insight is key for shaping accurate budgets and forecasts and mapping out the company’s financial path ahead. By pooling insights from different departments, FP&A experts craft detailed budgets that jive with the company’s objectives and financial limits.

FP&A teams run scenario analyses to pinpoint risks and opportunities, arming management with insights to navigate uncertainties. With careful budgeting and forecasting, FP&A experts fine-tune the use of resources to ensure that investments will bring maximum value to the organization.


It all begins with creating a vision for the future. FP&A experts craft plans that align financial goals with broader business objectives and market trends. They dive into market analysis, researching and reviewing competitors to spot growth opportunities and potential threats, guiding strategic choices. 


FP&A creates intricate financial models to test out different scenarios, seeing how strategic choices, market changes, or external factors could affect the organization’s financial performance. Sensitivity analysis is done to see how tweaks in key assumptions impact financial outcomes, giving insights into the risk levels of different situations. On top of that, FP&A looks into the financial feasibility of investment opportunities like mergers, acquisitions, projects, and new products using strong financial models.

Essential FP&A Skills

In 2022, FP&A ranks as the thirteenth fastest-growing role in the U.S. But, in order to effectively back up business units and the entire organization, an FP&A analyst or director needs a mix of hard and soft skills. 

They dive deep into spreadsheets for data analysis, so being highly skilled in Microsoft Excel is a must as 95% of finance professionals say. A knack for numbers is key, often attracting former accountants to the role. But it’s not just about math; they also tackle data from various departments like sales, marketing, HR, and operations. Plus, grasping the basics of ERP systems is important for streamlined reporting and analysis.

Having strong business partnering skills is crucial for FP&A team members because they need to communicate and collaborate effectively with colleagues throughout the organization. These skills help them comprehend the company’s priorities and goals, gain a deep understanding of company processes, and turn vast data into user-friendly reports. And let’s not forget the importance of top-notch problem-solving skills to tackle the hurdles of consolidating and reconciling financial data.

To perform effectively, an FP&A analyst or director should possess the following skills:

  • Analytical Abilities (financial, data, corporate)
  • Communication Proficiency
  • Competence in Stakeholder Management  
  • Expert Presentation Techniques
  • Financial Modeling
  • Meticulous
  • Research Proficiency

Final Thoughts

By blending historical data with predictive modeling, FP&A experts help align a company’s strategies with its financial goals. As an integral component of corporate strategy, FP&A ensures that businesses are well-prepared to navigate uncertainties and capitalize on opportunities. But, how can organizations further leverage FP&A to enhance their strategic planning and decision-making processes?

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