FP&A
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Financial Planning and Analysis (FP&A), in accounting and business, refers to the interrelated financial management activities of budgeting, forecasting, and analysis. FP&A differs from accounting (and personal financial planning) in that it is both qualitative and quantitative analysis, and more generally, in its forward looking orientation. [1][2] [3] [4] [5] See Financial analyst § Financial planning and analysis for an overview.
Responsibilities
[edit]Budgeting
[edit]Budgeting is a major element of FP&A, serving as a starting point for the business expenses and allows companies to establish priorities and evaluate the achievement of their objectives. [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 is important for FP&A analysts to be involved in both processes.[3]
Planning and analysis
[edit]Budgeting and forecasting are typically done at specific times in the year, and correspondingly cover specific time periods. FP&A's planning and analysis, by contrast, has a wider scope re both schedule and content. FP&A analysts thus play an important role in every (major) decision by the company - which may be anything from how differences in headcount will affect the company, to bigger decisions such as mergers and acquisitions (M&A).[1]
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]
See also
[edit]- Financial analyst § Financial planning and analysis
- Financial management
- Corporate budget
- Cash flow forecast
- Financial forecast
- Capital budgeting
- Working capital management
- Financial modeling § Accounting
- FP&A Professional (FPAC)
- Corporate finance analyst
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.