FP&A
Financial Planning and Analysis (FP&A) is a term used in accounting for performing financial activities such as budgeting, forecasting, and analysis. FP&A is different than accounting and personal financial planning in that it does both qualitative and quantitative analysis.[1][2][3][4][5]
Evolution of FP&A
[edit]Over the years, FP&A has evolved due to technological advances and the growing demand for effective financial planning and decision-making. During its early years from 1960s to 1980s, FP&A relied on spreadsheets and financial modeling software available during that period such as Lotus 1-2-3 and VisiCalc. From 1980s to early 2000s, FP&A utilized the financial modeling and data analytics software such as such as Cognos and Business Objects. From 2000s to present tools used in FP&A include cloud-based platforms, such as Amazon Web Services (AWS) and Microsoft Azure, and predictive analytics tools, such as SAS, R, and Python.[4]
Responsibilities of FP&A
[edit]Budgeting
[edit]Budgeting is a big part of FP&A as it is a starting point for the business expenses and allows companies to establish priorities and evaluate the achievement of their objectives. There are many different types of budgets no matter what type the an organization chooses, budgeting is one of the most important tasks of FP&A.[1]
Forecasting
[edit]Forecasting is the process of making predictions about the future based on past and present data and analysis. Forecasting goes along with the budget as a forecast can only go as far as the budget was set for - therefore it’s important for FP&A analysts to be involved in both processes.[3]
Planning and analysis
[edit]Budgeting and forecasting are more conservative financial terms that are done at a specific time which cover specific time periods. A big part of FP&A is planning and analysis which is less specific about when and how it’s done. FP&A analysts play an important role in every decision by the company and can be anything from how differences in headcount will affect the company to bigger decisions such as mergers and acquisitions (M&E).[1]
References
[edit]- ^ a b c "What is Financial Planning and Analysis (FP&A)?". SAP. Retrieved 2024-11-17.
- ^ Datarails (2024-04-11). "What is FP&A? Overview, History, Responsibilities, and More". Datarails. Retrieved 2024-11-21.
- ^ a b "Evolution of financial planning and analysis (FP&A)". Evolution of financial planning and analysis (FP&A) | Workiva. Retrieved 2024-11-17.
- ^ a b "The Evolution of FP&A". www.linkedin.com. Retrieved 2024-11-17.
- ^ DeLoach, Jim. "FP&A—A Double-Duty Mandate For The CFO Necessitates Mature Capabilities". Forbes. Retrieved 2024-11-17.