Our FP&A practice can also act as interim CFO, perform budgeting, forecasting, modeling, and analysis that support major decisions of the CFO, CEO, and Board of Directors. We help build and institute sustainable finance practices, capital planning and operations management strategies. Discuss your plans with us today. Request an Estimate
Our Financial planning and analysis (FP&A) practice supports the CFO, finance department, and Strategic Business Unit (SBU) leaders to provide senior management with short and long range forecasts of the company’s financial condition, profit and loss (income statement) and operating performance, periodic and ad hoc reports in compliance with GAAP. The forecasts inform management on the progress and effectiveness of the company’s strategic plans and investments. They also enable management to communicate with external stakeholders. FP&A’s role as the “eyes and ears” of the organization makes it a central liaison between corporate and operations teams. Our FP&A practice provides support to the CFO, CEO, Board, and SBUs.
FP&A not only reports forecasts and variances but also uses analytics to advise management on decisions to improve performance, minimize risk and capture new opportunities internally and external environments. To this end, our FP&A team is focused on strategic planning complex accounting (financial, managerial, cost, etc) and with the creation of periodic “CFO” reports that provide:
- Analysis of historical financials
- Variance Analysis
- Forecast of risks and opportunities to current plan
- Key Performance Indicators
At its best, the report provides the CFO with enough information to answer key questions from external stakeholders and may identify various levers that can be pulled to optimize performance or meet certain goals.
The FP&A function is inevitably pulled in to work on special projects. Examples vary from company to company and may include:
- M&A: Identifying potential acquisition targets, Sell and buy-side support, asset valuation integration and divestitures.
- Process Optimization: A perennial problem for large organizations is workflow inefficiency that arises when various technical systems and tools don’t “speak to each other” and are not aligned well. Resolving this often requires time consuming manual intervention. Because FP&A teams find themselves in the middle of these process inefficiencies, they are often the ones tasked with improving them.
- Market research: Determining the size of a given market, market dynamics, leaders, laggards, and potential opportunities in which the organization may have a competitive advantage.
- Capital Planning and Allocation: How much of and on what should the organization’s capital be spent on investments, R&D, etc.
Key FP&A Functions
For public companies, the role of FP&A is particularly important because management teams often provide revenue and net income guidance to shareholders based on the budget and forecasts prepared by the team. Getting these forecasts wrong not only prevents management from accurately allocating resources and achieving its strategic plan, but also has a direct and immediate impact on a company’s share price.
In the CNBC video, you can see how Under Armour shares plunged 23% when the company announced that it did not achieve the prior quarter’s forecast (“guidance”) that it provided to investors.