How FP&A is Changing the Way Firms Think About Forecasting

January 6, 2016 |

Some things are easier to forecast than others. Gyms will be packed with New Year’s resolution makers for at least the first half of January. Credit card bills will shock even the most frugal of shoppers. And Valentine’s Day sales will begin before the Christmas trees get hauled away.

Too bad forecasting isn’t so obvious in corporate boardrooms and finance departments.

Fortunately, a more relevant form of planning and forecasting is not only on the rise in many mid-large sized organizations, but emerging as a distinct and valuable contribution from the CFO’s team. The Wall Street Journal, took note of this last week in a piece on how well-established firms like Dunkin’ Donuts and GoDaddy are reaping the benefits of a more forward-looking approach to planning and analytics.

“Increasingly, the real power behind the numbers isn’t accounting, but a function known as financial planning and analysis, or FP&A,” the WSJ said. “Employees in these groups work on everything from forecasting sales, earnings and buybacks to employee raises.”

Like corporate performance management (CPM), FP&A is more than just an acronym. The WSJ further noted the approach may do more than help companies boost sales and reach other business objectives. FP&A could also become the place where the next generation of CFOs work their way up.

FP&A Growing Pains

While FP&A gained a lot of momentum after a certification program was introduced by the Association for Financial Professionals a few years ago, many organizations still need to balance the skill set with their workflow and process. Some of the early challenges were captured a few months ago by a survey of more than 2,000 companies by consulting firm CEB. Some of the worrying numbers:

An article on offered a succinct but powerful way to differentiate an approach to FP&A that really works:

Good analysis . . .  is problem-focused. It anticipates decisions that will need to be made, illustrates trade-offs, and disrupts conventional wisdom.

Of course, disciplines like FP&A won’t necessarily transform a company overnight. As finance teams gain more experience, review their reporting requirements and adopt tools that assist them in gathering and analyzing the information they need, their ability to turn numbers into trusted, actionable insights will only increase.

That’s probably the easiest forecast to make of all.


The post How FP&A is Changing the Way Firms Think About Forecasting appeared first on Blog | Vena Voice | Vena Solutions.


Recommended Posts

The Manifesto for Agile Finance-Led Business Planning

June 24, 2020 |

Read More

Vena Releases Microsoft Power BI Data Connector, Gets Recognized By Nucleus Research

January 8, 2020 |

Read More

Infographic: 5 Budgeting Best Practices You Need To Start Using Today

November 11, 2019 |

Read More