The strategic bridge between historical accounting data and future business decisions
FP&A stands for Financial Planning & Analysis. It is a finance function within a company that is focused on forward-looking activities—planning, forecasting, analyzing, and providing strategic recommendations—to support senior management in making critical business decisions.
Think of it as the bridge between the purely historical, record-keeping function of accounting and the strategic, future-oriented role of the CEO.
"How did we perform last quarter?"
"Based on that performance, how will we perform next year, and what should we do differently to hit our goals?"
Creating financial plans for the future including annual budgets and continuously updated forecasts. Modern FP&A uses rolling forecasts for greater agility.
Providing internal reports that go beyond standard financial statements, tracking KPIs, and performing variance analysis to explain performance gaps.
Developing long-range plans (3-5 years) and evaluating potential scenarios like market entry, product launches, or acquisitions.
Acting as strategic partners to business leaders, providing data-driven analysis for decisions on hiring, pricing, and resource allocation.
Digging into business drivers through unit economics and product/channel profitability analysis to understand value creation.
The Captain steering the company toward its strategic vision
The Logkeepers recording where the ship has been and resources used
The Navigators using data and models to guide the captain toward the destination
Links Income Statement, Balance Sheet, and Cash Flow
Forecasts built from operational drivers
Tests outcomes under different assumptions
In essence, FP&A transforms raw financial data into actionable intelligence. It is a proactive, analytical, and strategic function that is critical for guiding a company's growth, profitability, and long-term success.