Financial Planning and Analysis (FP&A) has always been a part of forward-looking financial functions at most corporations.
FP&A focuses on collecting data, analyzing it, and sharing detailed reports with key decision-makers of the company. As companies strive to stand out in the rapidly evolving business environment, FP&A has the potential to become a business operation that can drive revenue, fuel growth, and encourage informed decision-making through business partnering.
Business partnership, in the context of FP&A, is a movement driving a paradigm transition in the function, role, and strategic journey of FP&A. To realize its full potential, FP&A needs to transition from transaction reporting and processing to offering support to key business units within the company for decision-making.
FP&A teams have always been data-oriented and possess the infrastructure required for data collection and analysis. This infrastructure is essential to comprehend the core operations of the business and their respective performances.
But FP&A has often not been directly involved in the decision-making processes that determine the direction of the company. Through business partnering, FP&A can become a key driver of value rather than being a passive reporting operation.
Who are finance business partners?
A finance business partner is a storyteller who delivers financial and analytical information to decision-making teams.
An FP&A business partner differs from a general finance business partner as they are responsible for the tasks of an analyst simultaneously. The role performed by an FP&A business partner is extremely influential and strategic in nature.
Under finance business partnership, it is the duty of the FP&A business partner to align the operations of the FP&A teams with the core operations of the company. This requires leaving the mindset of a number-cruncher behind and assuming collaborative roles that bring the FP&A teams in sync with the entire company.
Then, FP&A teams can use their financial know-how to help identify opportunities for growth, change, and enhanced performance.
What is the structure of an FP&A team?
Generally, FP&A teams can be organized in three different ways:
- Geography: This strategy is generally used by multinational companies who want FP&A teams to provide local knowledge support for leadership
- Functions: This approach is used when FP&A teams are required to handle specific functions only
- Line of Business: Here, FP&A teams are organized to offer support to different business lines of an organization
The structure of FP&A teams is generally similar across organizations and features individuals handling the following roles:
- CFO: The Chief Financial Officer leads finance functions. It is the CFO’s duty to communicate reports and analyses prepared by FP&A teams with decision-makers like the CEO, business partners, and other stakeholders.
- FP&A Director: The FP&A director links the CFO and FP&A analysts. The director can act as the FP&A manager as well by overlooking the day-to-day operations of FP&A teams.
- FP&A Analysts: FP&A analysts handle day-to-day operations, including data collection and analysis related to the financial performance of the company. They are further responsible for financial modeling and forecasting to ascertain future trends.
It is the duty of the entire FP&A team to determine the need for any major financial decisions and then communicate this message to the key decision-makers. Every team member working under the FP&A department must develop a business partner mindset that goes beyond the traditionally defined roles in the following ways:
- Collaborate as Partners: As FP&A business partners, team members must leverage their abilities to collaborate and connect with the entire organization. In this business partnership, FP&A teams must strive for proximity to the key stakeholders and management to start driving conversations and making an impact on the decision-making process.
- Work as Supporters: FP&A business partners must have a perfect understanding of the company’s requirements and goals. FP&A teams must, therefore, constantly strive to be competitive, cost-effective, value-driven, and customer-centric.
- Focus on Growth: FP&A business partners need to leave the traditional isolated mindset and develop a deeper understanding of the growth drivers for the business. They can then focus on growth drivers for the business.
Why is it so important for FP&A teams to embrace business partnership?
Business partnership is increasingly regarded as a prominent FP&A role. The recent technological advancements and constant competitive pressure on businesses have necessitated that all teams do more with fewer resources.
With the availability of new analytical tools and technologies, the role of FP&A teams has transformed from being a gatekeeper of financial data to that of a business partner. FP&A must be responsive to the evolving needs of the business to stay relevant at the decision-making table.
Encouraging Organizational Autonomy
FP&A teams are traditionally responsible for sharing datasets with different departments on request. But as business partners, FP&A teams must not only own the data but also own a process that allows the relevant departments to access that data.
However, security controls ensure that the individual asking for the access is working in a role eligible to access the data. Maintaining the integrity of financial data is a core responsibility of FP&A business partners.
Delivering Actionable Insights
FP&A business partners need to deliver detailed reports and actionable insights to management for the financial aspects of the company. Based on the data analysis and insights shared by FP&A teams, decision-makers are able to formulate the future strategy.
Hence, FP&A business partners must trade manual data processing for integrated FP&A platforms to help save time that would otherwise be spent on data collection and analysis. This would provide them more time to focus on data analysis to draw useful insights necessary for decision-making.
Pursue Automation to Save Time
In hyper-competitive business environments, time is of the essence. As business partners, FP&A must own the responsibility of pursuing automation to expedite different processes.
One of the options that FP&A business partners can pursue is adopting data connectors and integrations. It is important to ensure that these integrations are compatible with the existing systems to create an integrated tech stack. Seamless integration of data connectors with the tech stack would enable FP&A teams to complete their tasks in a quick time.
Informed Decision Making
Another crucial role of FP&A teams is to provide analysis to leadership to facilitate informed decision-making. As business partners, FP&A teams can use a suitable platform to create a single source of truth to drive better business strategy. When leadership has access to data in real-time along with actionable insights, the decision-making process is considerably expedited.
Starting on the path of business partnership as an FP&A team
The traditional duties of an FP&A team have been well defined by many experts, but they would not suffice in the present times. FP&A teams must now strive to move up the value chain in the company and transition out of the standard roles related to accounting and finance operations. Here are some tips to help FP&A teams to start on the path of business partnership:
Adopt FP&A Best Practices
Firstly, it is important to identify the best FP&A practices and then adopt them as a part of everyday routine. To determine FP&A best practices, it is essential to develop a keen understanding of the business, its key drivers, customers, and stakeholders. After understanding the performance goals, FP&A teams can define the best practices to be followed.
Automate manual processes
To become business partners, FP&A teams must undertake all steps to automate manual processes. This includes the integration of a comprehensive FP&A platform like Pigment that can help save time taken for various manual operations like data collection and sanitization. Through automation of manual processes, FP&A teams can save considerable time and utilize it instead for detailed data analysis.
Standardize data and definitions of data
FP&A teams must take ownership of data collected from multiple sources. This includes standardizing data and the definition of data itself. This will help ensure a single source of truth for the entire company where decision makers at all levels will have access to updated data helping with informed decision making.
Invest in an integrated business planning and analysis tool
FP&A teams must invest in an integrated business planning and analysis tool to streamline the data collection, hygiene, and analysis practices. By integrating a suitable tool with the existing systems, FP&A teams can enhance the efficiency of the tech stack. They can also ensure better accuracy of the analysis and insights delivered to leadership. Moreover, as business partners, FP&A teams can then have more time to assist with the decision-making process at all levels.
Adopt cross-functional collaboration as a way of life
Increasingly, departments avoid working in silos as much as possible. While it is imperative to function in collaboration with other departments to deliver the best results, the same holds true for FP&A departments. Whether it is a single FP&A team operating in the department or multiple teams, they must assume the leadership role wherever possible and support other stakeholders as and when necessary. This business partnership would entail FP&A teams making cross-functional collaboration as a way of life where they offer assistance to other teams whenever required.
Spend more time on developing insights and forecasts
FP&A business partners should automate the standard manual tasks related to data collection and sanitization. This would enable them to focus 80% of their time on developing meaningful insights, reports, and forecasts that can then be shared with the CFO and senior management. With more time on hand, FP&A teams can also partner the CFO and other stakeholders during the decision-making process.
Encourage the entire company to understand the value you deliver as a department
Having ongoing communication with other departments and stakeholders is essential for FP&A teams to establish their role as business partners. This will help the entire company to understand and appreciate the value that the FP&A department adds to the entire organization.
When it comes to FP&A business partnerships, it is important to note that there is no one-size-fits-all approach that can be undertaken. The specific strategies and processes to be pursued for this incredible transformation from a strict finance role to a seat at the decision-making table will vary based on the size and nature of the organization.