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The Ultimate Guide to FP&A

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FP&A, also known as financial planning and analysis, refers to the strategic activities that are critical to the overall financial health of all companies--regardless of size, revenue or industry. 

In this guide, we focus on the finer details of FP&A, ranging from the basics to the best tools and everything in between.


What Is FP&A?

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Financial planning and analysis is a set of four distinct activities that support a company's financial health. These four activities include:

  • Planning and budgeting
  • Integrated financial planning
  • Management and performance reporting
  • Forecasting and modelling

Unlike accounting in general, FP&A is unique in the way that it focuses on forward-looking data to predict and prepare for future outcomes.

FP&A Processes

As noted above, there are four activities associated with financial planning and analysis. With those in mind, let's examine five points associated with these activities:

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1. Analyzing Your Company's Current Financial Circumstances

No matter your approach to financial planning and analysis, the first step is to always analyse your company's current financial circumstances.

2. Defining Financial Goals

Outline short and long-term financial goals that fit within your budget and make sense for your organisation's overall financial plan.

3. Consider Variables and Run What-If Scenarios

This is where forecasting comes into play. Consider variables and run what-if scenarios to prepare for anything the future could bring--both good and bad.

4. Create a Plan of Action

Financial planning and analysis is only as good as your plan of action. You can collect and analyse as much data as you want, but it's only useful if you back it up with a plan of action.

5. Re-Evaluate and Revise as Necessary

Even if you're fully dedicated to FP&A and have a sound understanding of what you're doing and what you're trying to accomplish, you could still make mistakes along the way. Re-evaluate and revise your plan, as necessary, to ensure that it's as accurate as possible moving forward. The more times you do this, the more you'll realise how to avoid similar situations in the future.

FP&A Best Practices

As you learn more about FP&A, you'll come to find that you can approach it in a variety of ways. However you decide to move forward, follow these best practices to help you evaluate your process and make informed decisions that benefit your organisation.

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1. Start With a Strategy and End With an Actionable Plan

FP&A starts with a strategy, but should end with an actionable plan. This is the plan that guides your organisation moving forward.

2. Set Goals and Identify Resources Needed To Reach Them

Set short- and long-term goals so that you can identify the resources required to reach them on time.

3. Collect and Review All Applicable Data

It's best to collect and review all applicable data before making key decisions. This saves you from having to redo your work.

4. Identify Who Is Responsible for Which Tasks

You must pinpoint who is responsible for each task associated with your plan. Below, we'll discuss the roles within the FP&A process.

5. Hold People Accountable for Delivering

Accountability is a must as it keeps your team on track and everyone working toward reaching the organisation's goals.

6. Monitor Results

Don't assume that your FP&A plan is working. Closely monitor results to track progress and determine where you're winning and losing.

7. Implement a System for Sharing Data

You'll share data at many stages of the FP&A process. For instance, you may need to request specific numbers from department heads. And as your plan gets up and running, you'll want to share progress reports.

8. Assess and Make Changes as Necessary

Your goal is to create a comprehensive FP&A plan that guides the organisation without error. However, there will be times when changes are necessary. Make it a habit to regularly assess your plan and to make changes as necessary.

FP&A Benefits

Don't look at financial planning and analysis as an unnecessary necessity. Look at it as something that can greatly improve your company's financial well-being. Here are some of the many benefits associated with a defined FP&A process:

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  • Ensures cohesiveness across the company
  • Drives shareholder value
  • Builds organisational awareness
  • Ensures the proper allocation of resources
  • Provides the tools necessary to reach and exceed financial goals

You'll soon come to realise the power of these benefits among many others. And that's just what you need to get on board with the importance of financial planning and analysis.

FP&A Roles

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Financial planning and analysis teams play a major role in a company's ability to perform, budget, forecast and analyse with success. 

FP&A roles vary from company to company. For example, in a large company with thousands of employees, there may be a countless number of finance professionals responsible for financial planning and analysis.

Conversely, in a smaller company--one with only a handful of employees--there may be only one or two people with their hands on the FP&A process.

Some of the most common FP&A roles include:

  • FP&A analyst: Gathers data about company financials, develops models and creates summaries.
  • Senior FP&A analyst: Manages FP&A analysts, analyses data, shares reports with managers and acts as a go-between with other departments.
  • FP&A manager: Focuses a large portion of their time on quality control tasks, running meetings and ensuring that all departments are on the same page.
  • FP&A director (sometimes known as the vice president of FP&A): Presents data to leadership and makes recommendations on how to proceed.
  • Chief financial officer (CFO): Makes final decisions regarding a company's financial operations.

Even though some of these roles sound similar, each one has a distinct set of responsibilities. When working together, an FP&A team can account for every task.


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FP&A Career Paths

Icon of a person walking up stairsAre you interested in working as part of a financial planning and analysis team? Are you unsure of how to get started? A basic understanding of the FP&A career path will help you decide where to start and how to move up the career ladder.

  • Financial intern (often while you're undergraduate or graduate degree)
  • Accountant
  • FP&A analyst
  • Senior FP&A analyst
  • FP&A manager
  • FP&A director (or vice president of FP&A)
  • Chief financial officer (CFO)

To decide if FP&A is the right career path, you'll want to secure an internship. Should you enjoy the work, you can begin your search for a full-time job upon graduation. It generally takes between one and three years of working as an accountant to graduate to an FP&A analyst position. And if you have your eyes set on one day becoming CFO, expect to put in 10+ years to prepare yourself.

FP&A Tools

FP&A tools are designed to simplify the process, automate tasks and save everyone time--all while preventing mistakes. 

There's no shortage of financial planning and analysis tools to employ. Here are the most common types:

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Budgeting and Forecasting

Here's an excerpt from our ultimate guide on budgeting and forecasting that explains these two terms:

"We already know that budgeting is figuring out how much money your company will need to spend in order to achieve its desired business results. Forecasting, on the other hand, is about proactively analyzing the budget and using both historical and real-time data to predict what those business results will look like."

There are FP&A tools to assist with both processes. For example, you can use a tool to collect all required data from applicable departments when creating a budget. Doing this in a centralised location eliminates the risk of data going missing while ensuring that you always have access to current, accurate numbers.

Corporate Budgeting

Corporate budgeting is a key finance function and it should be treated as such. This is the process of allocating resources to operations to enable their strategies.

Just the same as budgeting and forecasting, there are tools to help manage the process. Examples include tools for scenario modelling or zero-based budgeting.

CapEx Planning

A CapEx planning tool, such as Vena's CapEx software, allows you to input and manage individual assets by properties such as book value, useful life, residual amount and more.

The right tool will help keep your CapEx and annual budgets separate.

OpEx Planning

OpEx may fit into the same basic category as CapEx, but they're not one and the same. The right tool allows you to budget for operating expenses without confusing them with capital expenditures. 

Find a tool to build workflows for collaborative budgeting and analyse the impact of potential changes with what-if analysis.


With cost allocation software, you can manage your cost centers with real-time allocations, build better budgets and map your overhead allocations based on many variables. The right tool can also help you shorten your month-end close.

Cash Flow Planning

Cash flow planning empowers you to dive deeper into your data so you can plan with intention across your business. The use of software that facilitates cash flow planning allows you to bring data together from your existing systems into a centralised database. This unified data helps FP&A teams create actionable insights and reports for a collaborative, cross-functional planning process.

Revenue Planning

The right revenue planning tool can be the difference between a healthy organisation and one that's burning money. The goal is to look for a solution that automatically aggregates data so you can detect issues early, hit your deadlines and execute with confidence.

Financial Reporting

The key to successful financial reporting is all about having access to the right dashboards. The three types of dashboards you need for financial reporting include:

  • Business health dashboard: Evaluate short- and long-term financial metrics based on your company's short- and long-term goals.
  • Employee health dashboard: Track employee data such as days off, revenue per employee and more.
  • Customer health dashboard: Measuring how client relationships impact your company's finances.

Financial Dashboards

The creation of a financial dashboard provides you with the ability to track finance-related key performance indicators (KPIs) such as operating cash flow, operating expense, current ratio, net profit margin, net profit or EBITDA, sales growth and return on investment.

Workforce Planning

Workforce planning is the process of analyzing your workforce and using the data collected to forecast and plan for current and future needs.

Workforce planning software makes it simple to run reports such as:

  • Compensation report
  • Headcount report
  • Performance report
  • Recruiting report
  • Variance analysis report

Scenario Planning

Nobody knows what the future will bring, but that doesn't mean you can't prepare for any possibility. Scenario planning software helps you understand the potential impact of your current decisions on the future. You can also test potential changes to see how they could affect your company down the road.

Final Thoughts

According to McKinsey & Company, finance departments have become more cost-efficient over the past decade. 

The management and consulting firm also noted that finance leaders are "spending a greater portion of their time on value-added activities, such as financial planning and analysis (FP&A), strategic planning, treasury, operational-risk management and policy setting."

If you're one of those leaders who has gained ground in this area, now's not the time to stop. There are other things you can do to improve your approach to financial planning and analysis.


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