financial planning, financial plan, financial planning and analysis, FP&A

What is FP&A, or Financial Planning and Analysis?

Financial Planning and Analysis teams play a crucial role in companies by performing budgeting, forecasting, and analysis that support major corporate decisions of the CFO, CEO, and the Board of Directors. A company simply cannot be successful and profitable without careful financial planning and cashflow management. These jobs fall onto the FP&A team and the Chief Financial Officer (CFO).

What Do Financial Planning and Financial Analysts Do?


  1. Overseeing the company’s overall financial health, using KPIs such as the debt-to-equity ratio, current ratio, and interest coverage ratio.
  2. Evaluate whether the company’s current assets and investments are the best use of the company’s working capital by looking at the Return on Investment (ROI) in comparison with other ways that the company could use its cashflow.
  3. Examine which of the company’s products or product lines generate the largest portion of its net profit.
  4. Identify which products have the highest profit margin.
  5. Examine and evaluate the cost-efficiency of each department of the company.
  6. Prepare budgets for each department and the corporate budget.
  7. Prepare internal reports for executive leadership.
  8. Create and update financial models and forecasts of the company’s future operations.
  9. Compare historical results against budgets and forecasts, performing variance analysis to explain these differences in performance.
  10. Develop opportunities and ideas for the company to expand and grow. This can include capital expenditures and investments and be sure to provide three-to-five-year financial forecasts.

Role of the Chief Financial Officer in FP&A:

The CFO manages the entire accounting and finance personnel, including the FP&A team. They provide the strategic expertise needed to guide the company in the right direction.

Profitability: CFOs work with the CEO to make strategic decisions to ensure the value and profitability of a business. One of their most important roles is to create shareholder value.

Reporting: CFOs are wholly responsible for reporting to the Board of Directors and working with the CEO to meet their demands, as well as reporting the financial results to the CEO.

Business Management: CFOs essentially manage the business, and provide financial information, KPIs, financial statements and forecasts. After all, without a profit and financial wellbeing, a company is not deemed successful.

CFOs report to:

  • Investors/Owner
  • Chief Executive Officer
  • President
  • Board of Directors
  • External Auditors
  • Other Stakeholders

Why Is Financial Planning Important for Companies?

Financial planning in companies is important because it allows for the short- and long-term goals to be determined more efficiently. Income is then much better managed through planning and will show what is going to be needed to cover expenditures.

Cash flow can be increased by monitoring the spending patterns and expenses. And by increasing cashflow, capital can then be increased and improve the overall financial wellbeing. Investors, bankers, and creditors typically will not set up a meeting with a business owner if you do not have a financial plan in place. This is true especially for small businesses.  By having a solid financial plan in place, it allows businesses to have a better understanding of the right types of investments that will fit their needs.

To sum it up, a financial plan can help a business to measure progress. Every business owner must have a systematic business plan that is consistently updated if they want to operate successfully.

Let NOW CFO Do Your Financial Planning:

NOW CFOs consultants offer an outside perspective to your business and its financials. Often, when a business owner is knee-deep in the day-to-day operations of running the business, they can lose sight of what has been done to grow their business. The financial plan will come into play here and show the business owner what is taking place, and to be able to review and analyze this data.

In summary, a financial plan can help a business to measure progress. Every business owner must have a systematic business plan that is consistently updated if they want to operate successfully, and our consultants will be sure that you have a robust financial plan in place.

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