How the FP&A Team Helps Align the Whole Organization

Finance teams

Strategic alignment lets cross-functional departments work together to meet goals. Here's how the FP&A team helps cross-functional alignment.

Text Link
Priyaanka Arora
September 23, 2022
·
8
min
Share on social media
How the FP&A Team Helps Align the Whole Organization

Summary

Financial Planning and Analysis (FP&A) is a process where qualified professionals undertake budgeting, financial planning, and forecasting processes to prepare analyses. The insight driven-analyses offer answers backed by data, helping a company’s leadership make better decisions.

The FP&A function has evolved considerably in the last few years and has become important for companies across the world. 

The FP&A team plays a strategic role in the company, setting the vision for future success and keeping all the company's departments on track. One of the key goals of the FP&A team is to align the organization through strategic alignment.

What is Strategic Alignment in Business?

Strategic alignment is defined as the process of planning and implementing certain practices to ensure that the strategies across the departments augment the overall objectives of the company.

When a company is strategically aligned, all its methods, operations, and practices work together toward the achievement of long-term goals. Cross-functional departments work in unison to fulfill the company's mission, vision, and objectives.

Who benefits from strategic alignment?

Different stakeholders across the company benefit from the process of strategic alignments, such as:

  • Leadership: Senior management and executives can make key decisions quickly as strategic alignment offers greater clarity on the duties and responsibilities of key personnel. 
  • Employees: With stronger autonomy and efficient task allocation, employee engagement across projects is improved. 
  • Investors: With well-defined objectives and action plans, investors enjoy better insights into the company's future direction. 
  • Customers: Properly aligned operations ensure time-bound deliveries for quality products and services that boost customer confidence in the company's offerings.

What are the advantages of strategic alignment?

Some of the key advantages of strategic alignment that make it a desirable option for companies worldwide are:

  • Optimal utilization of resources: Strategically aligned organizations enjoy effective utilization of resources, helping boost profitability.
  • Informed decision making: With easy access to data insights, management can make and implement informed strategic decisions in a time-bound manner. 
  • Organizational unity: As management and employees work towards a common goal, organizational unity is promoted, leading to better efficiency and productivity.
  • Updated reports: When a company is strategically aligned, departmental heads share regular reports with management to apprise them regarding the progress of projects.
  • Improved responsiveness: Strategically aligned businesses are more responsive to any changes in market situations, reducing any chances of productivity being affected. 

What does the FP&A team do?

The FP&A team works as a business partner for the entire company and enjoys a close working relationship with different departments, including acting as a strategic advisor for the entire leadership team. FP&A professionals help decision makers in the finance department ascertain the available savings, investment, and efficiency opportunities to mitigate additional costs.

What is FP&A?

FP&A is a combination of four functions that support a company's financial well-being. These four functions are management and performance reporting, planning and budgeting, forecasting and modeling, and integrated financial planning. A dedicated FP&A team in the finance department handles FP&A to boost the capabilities of the finance department by linking corporate strategy to execution.

What is the FP&A team structure?

As the function of the FP&A team is to process the data with the latest tools to prepare insightful reports for management's decision-making tasks, it features several key personnel. While the specific team structure might vary across companies, it usually features a couple of dedicated FP&A employees who report directly to the CFO. But as the organization expands its operations, the team might feature several FP&A analysts who report to the FP&A Director, who in turn reports to the CFO. 

What are the goals of the FP&A team? 

Every FP&A team has an extremely crucial role to play in a company as it operates to achieve essential goals:

  • Strategic alignment: The FP&A team aims to ensure strategic alignment between the different departments and the company's objectives.
  • Support Decision Making: FP&A teams aim to encourage informed decision-making from management through detailed reports. 
  • Improve Business Performance: FP&A team aims to boost business performance by optimizing cash flow and mitigating financial risks.
  • Deliver Crucial Data: FP&A teams compare past and present financial activities to determine their impact on the company's financial future.

How can the FP&A team be more efficient? 

The company's leadership must ensure that the FP&A team operates optimally. Some of the steps that can be taken to make the FP&A team more efficient are:

  • Optimize existing processes: You must identify inefficiencies and address them as soon as possible. This will enable the FP&A team to focus on more important tasks of creating innovative solutions for bigger challenges beckoning the company.
  • Automate processes: FP&A teams spend the majority of their time on data analysis and preparing reports. You can integrate new technological solutions in your analysis processes to free up more time for your FP&A team to drive impactful analysis of core issues.
  • Cross-functional collaboration: Cross-functional alignment is crucial for improved productivity and job satisfaction. Encourage collaboration within key departments and teams to improve the operational efficiency of your FP&A team. For instance, the FP&A team can collaborate with the RevOps team to develop better reporting standards.
  • Set up measurable KPIs: The FP&A team helps leadership make key decisions efficiently. But to determine the efficiency of the FP&A team itself, it is important to set up KPIs against which their performance can be measured. 
  • Determine the team's strength: To derive the best results from your FP&A team, play to the strengths of the combined talent on your time, and use any skill gaps to upskill existing team members or develop a hiring plan. 

How can the FP&A team help with strategic alignment in the organization?

Strong FP&A teams encourage a data-driven decision making process across the organization with their unbiased perspective. They bring in crucial elements like accountability, collaboration, and operational knowledge to help achieve strategic alignment across different departments of the organization. FP&A teams break down a bigger task into smaller tasks to help determine the organization's direction. 

here are several ways in which FP&A teams can help with strategic alignment in the organization:

Cost Saving

Strategic alignment helps optimize resources across departments to reduce expenses and enhance profits. FP&A teams help leadership develop an efficient prioritization system for strategic alignment between the company's goals and available financial resources. This makes the leadership team’s allocation of resources across teams and projects easier. As a result, the company can reduce its operational costs while boosting employee productivity at the same time.

Measuring the impact of each dollar spent

For any company to succeed with strategic alignment, it is important to have detailed information regarding every dollar spent across the organization. FP&A teams prepare detailed reports related to different financial aspects of the business, including the resources available. When management has an in-depth understanding of all the resources available, it is easier to ensure efficient allocation of resources across teams. Moreover, FP&A teams help minimize unnecessary spending across departments as well.

Uniting teams with better analytics

FP&A teams encourage strategic alignment in the organization through improved collaboration. Reports shared by FP&A teams feature detailed analytics based on available data and actionable insights that can be drawn from them. This information helps individual team members across departments better understand organizational goals and encourage them to collaborate on common tasks to deliver better value to the organization.

Sharing the organization's financial KPIs 

Capital efficiency is pivotal for sustainable and long-term revenue growth in an organization and helps with strategic alignment of individual efforts with the company's financial goals. FP&A teams help with strategic alignment by sharing the key financial KPIs with the concerned team members, who can then measure their performances with the KPIs and determine the further course of action. Some of the key KPIs to track are:

  • Return on Invested Capital
  • CAC Ratio
  • Venture Capital Efficiency Ratio
  • Burn Multiple

Scenario planning 

For strategic alignment to be successful in an organization, scenario planning is an essential exercise. FP&A teams undertake scenario planning for several purposes, such as risk assessment, deriving data-backed inferences, determining multiple ways to address an issue, and identifying cross-functional goals. This exercise helps the finance and revenue teams set their goals and develop an action plan to achieve those goals.

How do you align the budget with a strategic plan?

Aligning your strategic plan with the budget is extremely important, as a disconnect between these two aspects can spell trouble for the business due to poor strategy implementation. Here are the steps you can follow to align your budget with the strategic plan:

  • Define key short-term and long-term corporate objectives for every portion of the strategic plan.
  • Identify suitable strategies to achieve the corporate objectives and assess their probable impact.
  • Management must note down key assumptions regarding external and internal factors that can affect the achievement of strategic goals. 
  • After an actionable plan has been received, it is time to develop an operational budget for optimal allocation of resources. 
  • Risk assessment is also important to determine the steps required to mitigate risks.
  • Discussions between key stakeholders and decision-makers are required to determine the plan's completeness and strategies to implement it. 

FP&A teams play a crucial role in helping leadership implement strategic alignment across all levels. These teams prepare detailed reports that assist different departments to have a better understanding of company objectives and encourage them to optimize their operations to align departmental goals with corporate targets.

Product Tour

Sales planning

How the FP&A Team Helps Align the Whole Organization
Register now

Related articles