Guide to FP&A Financial Planning and Analysis

To have consistent internal logic and accurately report on the state of the business, all of this data needs to be accounted for, reconciled, and housed. With a growing emphasis on sustainability, FP&A will play a role in measuring and reporting on environmental, social, and governance (ESG) factors’ financial implications. The shift toward remote work will drive the use of collaboration tools and technologies in FP&A to facilitate communication and teamwork among distributed teams. This will enable agile teams to easily access whatever information they need and work together smoothly, regardless of location. According to the AFP, 53% of FP&A professionals say that the software they use for analysis elevates the quality.

Why Outsourcing Finance and Accounting is Essential for E-commerce and Retail Growth

According to Indeed, the average FP&A Analyst salary in London is £56,000, but this figure can be significantly higher depending on experience. We also recommend keeping a “change log” detailing substantive changes made to the model. This could simply be a separate sheet in the model where the financial analysts can input a description of what substantive changes they made, as well as the date of those changes. We recommend only including major, substantive changes like adding a schedule, as opposed to just logging when an assumption or other input is changed. Since FP&A models can be so different, even between similar companies and industries, it’s common for a new FP&A analyst to just build off of a legacy model. What happens then is that this keeps happening over and over, and the file ends up being overly complex and extremely large.

What software is used for FP&A?

What worked six months ago might not be relevant today—market conditions change, competition intensifies, and customer preferences shift. Corporate finance professionals, investment bankers, and corporate treasurers seeking to broaden their skill set. After the Director/VP level, the majority of FP&A professionals tend to stay within FP&A, either in their current organization or at other companies.

• Scenario modeling enables FP&A analysts to simulate different combinations of business actions and market conditions to forecast financial outcomes.
• A less draconian approach is to allow users to open the file without a password but does not allow users the ability to change the file, aside from the ability to enter data into a pre-selected number of cells.
• While often tied to accounting systems, FP&A software complements accounting software by providing management insights in addition to financial and operational data.
• For example, AI can automatically identify patterns and trends in financial data that might take a person hours or even days to spot.
• Many teams also use Google Sheets to make collaborating across the organization more fluid.
• They gather and analyze data to forecast results, track performance against goals, and explain what’s driving changes.

What Does FP&A Software Do? Key Components and Uses

Due to the highly analytical and inquisitive nature of a person who succeeds in FP&A, many also seek the entrepreneurial route by founding companies in all types of industries. The career path of FP&A professionals is less standard than that of investment bankers or consultants. Investors, meanwhile, can see how a company stacks up against its past performance and peer group and quickly get an idea of its health, profitability, and the attractiveness of its share price. To get a more complete picture, you need to compare borrowing to revenue, growth, and so forth. Vertical analysis compares each line item on a financial statement as a percentage of a base figure within the same statement.

Many CFOs start their career in FP&A because it provides a comprehensive business strategy and financial planning background. Financial planning and analysis (FP&A) is the set of strategic activities (planning, budgeting, forecasting, and analysis) that enable a company’s ongoing financial how is sales tax calculated health and ability to grow. FP&A teams are responsible for gathering data and providing value-added financial analysis to a business. This implies that FP&A should guide all significant decisions a company makes. Identify the key features required to support your financial planning and analysis goals.

• As organizations increasingly rely on data-driven insights, FP&A professionals are in high demand.
• It also helps departments outside of finance to make decisions that are financially sound and aligned with the organization’s objectives.
• FP&A teams often communicate complex financial insights by visualizing data in dashboards, charts and graphs.
• FP&A provides a structured framework for evaluating the financial health of a company, enabling it to allocate resources efficiently, set achievable targets, and navigate through dynamic market conditions.
• This visibility reveals which offerings generate profit and which destroy value.

Diving In: What is Financial Analysis?

Working in FP&A requires a broad understand of both accounting and business operations. As a result, FP&A teams are in frequent contact with all areas of the enterprise including operations, sales, marketing, treasury and accounting. Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI’s full course catalog and accredited Certification Programs. About 20% of financial analysts end up going into business for themselves, becoming private business consultants. Compensation in the financial analysis field varies substantially between different industries and companies.

Types of Financial Analysis

Track only a handful—about 5 to 10—that directly inform decisions and drive accountability. Accurate, regularly refreshed forecasts lay the foundation for stronger financial models and better strategic decisions. The function has evolved from compiling reports to driving predictive modeling, real-time dashboards, and AI-powered insights. Today, FP&A professionals spend more time partnering with business leaders and less time on manual spreadsheet Financial Planning and Analysis work. While most FP&A roles require some previous experience, it is possible to get into the field without direct experience. One way to do this is to gain relevant skills and experience through internships or entry-level finance roles such as accounting or financial analysis.