Financial planning and analysis (FP&A) is a key and critical function that every organization must value due to its impacts on budgeting, resource utilization, and organizational performance. Therefore, every company must have a designated FP&A team or functions operating alongside others to ensure success.  

It is also a key tool that drives organizational decision-making due to the vast data processed and informative reports managers can use for timely decision-making. 

Deploying a powerful FP&A tool is necessary for streamlining all organizational financial practices in various departments and analyzing the impacts of finance practices on organizational performance. It is a broad function encompassing business performance analysis, long-term strategies planning, management reporting, budgeting, forecasting, etc.  

Despite having the function, its success is based on the best practices, strategies, and activities implemented to ensure the best outcomes. Some of the best practices to implement are discussed below. 

1. Utilize Modeling, Predictability, and Analysis Tools

FP&A is a complex task that requires extensive reliance on various tools performing various roles to ensure success and help the organization achieve its goals and needs. Experts in financial planning advise on the need for complex financial tools such as SPSS, Excel, and other analytics committed to various goals such as financial modeling.  

Due to the levels of data involved in the FP&A, the integration of automated financial systems and software will be ideal for speedy, accurate, and reliable decision-making and financial strategies.  

For efficiency, ensure all the deployed FP&A tools are cloud-based and integrated into all the organizational systems and functions. Some of the best tools include CUBE, which can help with various FP&A goals functions; according to the cube software review, the primary function is to automate significant operations to ensure the organization meets all the business and customer-centric goals.  

Another reason to automate FP&A functions is to support data sharing and extraction, which is ideal for gaining the data input to process and making the best decisions. For excellence, experts also advise having a clear data model architecture that will rely on data from various data collection tools to make error-free, faster reports needed by the financial and managerial teams. 

2. Focus More on the Best Teams

Due to the nature of FP&A, there is a need for capacity, skills, and experience to accomplish various activities and goals. The teams formed should not only be financial and accountancy expertise but should include other departments and expertise. Some skills needed include automation, analytics, data engineering, cyber security, and human resources to ensure excellent team management.  

Due to the nature of systems involved in the FP&A, there is a need to ensure collaboration among different departments performing different roles and working as a team. 

A good FP&A team should include data experts focusing on various areas such as analytics, sorting, and streamlining to ensure whatever input goes into the system is what is needed. Other teams include budgeting, forecasting, and planning experts to ensure the interpretation of the generated reports to boost streamlined and data-driven decision-making.   

The team should have all the resources, such as communication and job-related resources, and ensure excellent leadership, training, and motivation to boost productivity. Collaboration is integral for deeper and greater insights since the data will be utilized extensively for organizational goals and benefits. 

3. Decentralized and Holistic Approach and Application

For most people, FP&A should be focused mainly on the organizational financial and accounting goals since these are the main functions that deal with budgeting, raising capital, financial analytics, and planning. However, there is a need to ensure that FP&A is decentralized to all the organization’s departments and activities.  

All functions in the organization have financial duties; for instance, financial duties in the supply chain would involve fueling, driver overtime, costs of repairs, and insurance needs. 

Integrating the FP&A functions in all the departments promotes planning, analytics, financial optimization, and best practices in all departments. The integration is also ideal for promoting collaboration, streamlining data outsourcing from all departments into the main organization analytics system.  

Therefore, the finance and accounting head offices should analyze insights from these departments and branches.  

Decentralization is also key for making finance-related strategies to boost departmental performance. For instance, if the FP&A reports from marketing reveal more impact of the cost spent on social media marketing than billboards, it would help prioritize financial expenses in the department. It is part of driving minor strategies ideal for the entire organization. 

4. Set KPIs for Various Functions

One of the main goals of FP&A is to reveal whether the organization is achieving its goals, the areas where it is excelling, underperforming, and the need for strategic improvements. Therefore, to meet all these goals, there is a need to introduce KPIs to align the analytics with the organizational business goals and objectives.  

If the goal was to monitor the potential for cost reduction or profitability, the KPIs should be about revenue per expense or quantity per certain expenses.  

Since all the systems are interconnected, the data from production, marketing, and sales should be part of the analysis, and the results should be compared with the organizational KPIs. Introducing KPIs can also help the FP&A teams track the trends over time to understand market changes, economic issues, their implications on the organization, etc.  

Based on the analytics reports, the organization can compare it with the targeted KPIs and then take risk minimization measures or strategy optimization to boost the company’s financial performance.  

Conclusion
 

The success and impacts of FP&A in the organization depend on the commitment to the best practices enforced in all the departments and the entire organization. The first practice is to automate to ensure faster, more accurate, and more reliable reports for timely and impactful decision-making.  

Next, you should focus on team approaches, activities, and collaboration amongst different departments, all working to meet the stipulated KPIs.