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Companies are investing in more Financial Planning & Analysis roles so if you don't know what exactly they do, this explainer will help you out.
So what is FP&A and how does it relate to your business? Financial Planning and Analysis (FP&A) is the process of forecasting business performance to support crucial decision making for company executives and senior management.
FP&A teams gather, transform and analyze financial data to paint a clear picture of the current and future state of the company, bringing together different data points from departments such as marketing, sales, operations, HR and more. Ultimately the FP&A team oversees and assists with integrated financial planning, reporting, and forecasting to help create a robust financial plan for the future.
FP&A is commonly viewed as a subset of strategic finance but the responsibilities vary depending on the size & industry of the company, and the size of the finance team. For scale-ups, SMEs and "tech" companies, FP&A and strategic finance functions often are one and the same, supporting the entire business.
FP&A is more short-term monthly planning alongside budget owners. Strategic finance focuses on longer term growth and development alongside the company C-suite.
As companies grow in size and complexity, FP&A and strategic finance tend to split. At smaller companies, specific FP&A roles don't exist, with tasks handled by a general financial analyst.
Roles with FP&A in their title often report to the CFO or FP&A Director. Strategic finance can sometimes fall under the strategy team managing the company's BizDev.
In technology companies, teams such as product, engineering, sales and marketing have invested significant amounts of budget in acquiring new types of software to find new efficiencies and increase productivity. However, finance teams (which are no longer seen as "back-office" players) have taken an outdated approach to budgeting and financial forecasting, weaving through pages upon pages of spreadsheets and bouncing between a number of different platforms in order to get the job done. Not only does this process weigh down the productivity of financial reporting and forecasting, but it also leaves room for manual error. So how can SaaS CFOs modernize their data reporting practices? By using an FP&A solution.
The modern CFO and finance team are now investing in technology to streamline this process, integrate data from different sources, and avoid the pains of collaborating with different budget holders over multiple Excel files, emails, calls, documents and systems. By using FP&A software, they are able to provide up-to-date models, reliable and consolidated metrics, and prepare for multiple scenarios - giving the strategic insight expected by leadership teams and investors in tech companies.
The right FP&A tool is more than just an excel automation software, it’s an all-encompassing hub for all things finance, offering a number of FP&A customizable features to cater to your organization. It's easy to see why financial teams everywhere are modernizing their financial modeling and forecasts by implementing a financial planning software into their current workflow processes.
Wondering how an FP&A software can level up your financial reporting and forecasting? Request a demo to find out now!
FP&A teams monitor the financial health of a company through financial forecasting, analysis, and reporting. In startup and scale up companies, the FP&A function is typically formed at 30 employees and their work commonly focuses on three key areas: resilience, action and synergy.An FP&A team provides resilience to a company. They bring the ability to adapt quickly thanks to their financial reporting, scenario planning, and data modeling techniques. With FP&A analytics, scaling companies can take action in a strategic way, generating insights based on real-time data that lead to making the right decisions and help the company take action on the areas that need restructuring or reforming. Lastly, when the FP&A team is built strategically, they create a synergy with other teams, sharing valuable predictive analytics, which ensures everyone is working together to make data-driven decisions that will drive the company forward.
When using FP&A tools, financial planners are able to cut down on manual tasks and endless email chains. The right FP&A solution enables effortless collaboration while also improving the accuracy of financial modeling and reporting. There are many use cases of personas who would benefit from using these financial solutions.
Thanks to the data automation an FP&A tool provides, SaaS CFOs and senior management can receive updated financial information in a matter of seconds. While finance managers are more focused on the forecasting process, a financial planning tool can reduce the time spent communicating with key stakeholders, allowing them to be more agile. Founders can also benefit from building their finance team tech stack with an FP&A solution because it would help them make better business decisions based on the right data.
Manual data prep: CFOs spend countless hours doing manual tasks on financial data prep. An FP&A solution can help free up time for finance teams so they can shift their focus to more valuable projects such as forecasting and reporting.
Lack of agility: Financial leaders need to have the most up-to-date info so they can accurately conduct their budgeting and forecasting. With intuitive FP&A tools, financial planning professionals can maintain data integrity while eliminating common manual errors.
Data silos: When data is being sent from different sources, financial planning professionals have to work in overdrive to try and condense all that information into a single report. Mistakes are common, causing longer delays and further setbacks.
Outdated data: Not being able to generate accurate insights due to a lack of reliable information is one of the main pain points a finance team will face. A FP&A tool refreshes monthly reports in seconds, helping to maintain data integrity and accuracy across the entire team.
Disconnected teams: Having to send back and forth emails only lengthens the data retrieving process. This hinders the finance team's ability to properly analyze data and formulate a comprehensive financial plan.
Check out our recent case studies to see real-life examples of how Abacum has revamped financial processes for major Fintech scale-ups.
When companies start scaling the business, finance processes tend to fall behind until it's a necessity. However, those organizations that start scaling the finance function as early as series A, or even earlier, can reap the benefits of having a good FP&A team that drives the strategic side of their finance initiatives.
According to seasoned professionals, like Peter Specht, this helps the organization be more resilient & better prepared for any possible scenario that may require quick structural changes in the structure or adapting processes. When adding an FP&A team into the mix, companies can actually use financial data to support their leaders & make better business decisions based on valuable, real-time insights.
A FP&A Manager has 6-9 years of work experience before landing a senior role, while a Director level takes up to 12. This varies by company size where reaching a senior level cold take less time.
Landing a senior FP&A role usually requires prior experience in forecasting & people planning. However, those that come from accounting or corporate finance often have the expertise to take on the role immediately.
The average FP&A manager salary in three of the largest tech hubs are similar. The difference lies in the range, where West Coast US has a larger gap, while the United Kingdom is much closer with a lower top-end.
Download the full FP&A Senior Profile infographic here.
FP&A roles are becoming more valuable, and so is the need to hire FP&A analysts to help with all of the financial reporting and forecasting. This infographic breaks down the different FP&A roles and responsibilities and at growing SaaS firms.
Learn more about FP&A here
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