What is an FP&A Analyst in Business?

The role of Financial Planning and Analysis (FP&A) within organizations has changed in recent years, leading to confusion over the question: What does an FP&A analyst actually do?

Since Firmbase provides a platform designed to meet the needs of FP&A teams, including analysts, and we’re constantly looking for ways to help them in their work, we have a lot of insight into this question. 

In this article, we’ll look at some of the day-to-day work of an FP&A analyst, how it fits into the broader picture of an organization, and what kinds of diversity it’s common to see when comparing FP&A teams in different companies. 

What Does an FP&A Analyst Do in Their Business?

An FP&A analyst is, on a high level, focused on answering these 3 questions:

• What has happened in the business? (Analyzing the past.)
• What is happening now in the business? (Analyzing real time data.)
• What is likely to happen in the future, to the business? (Forecasting, including thinking about how to position the company to mitigate risk and be poised to take advantage of business opportunities.)

In the past, the FP&A analyst role was quite narrowly focused, with an emphasis on financial data and results. FP&A teams were responsible for ensuring accurate documentation, reporting on the financial results and making sure they were communicated to the relevant stakeholders, and using financial data to create forecasts about what to expect relating to sales, expenses and projected income of the business. 

Recently, the role has adapted as FP&A teams – and the CFOs to whom they often report – have begun exploring the possibilities for far broader perspective and greater accuracy offered by new technologies. 

Machine learning and AI, and automation that streamlines information gathering and repetitive manual tasks, mean that today’s FP&A analysts leverage vastly more data, and spend a lot more of their time analyzing and strategizing.

It’s a process of transformation that is still in progress, and which is speeding up as more organizations incorporate automation into their FP&A work. It’s worth the investment, because currently only 13% of organizations manage to flag issues with performance before they have a financial impact. When FP&A teams can cast their data net much wider, while minimizing the effort of information gathering through automation, this number can improve dramatically. 

What Does an FP&A Analyst Do Day-to-Day?

The specific job of an individual FP&A analyst varies depending on the organization, its structure, growth stage, and the role played by the individual analyst. 

That said, there are certain things that are often prominent in the role for an FP&A analyst. Strong modeling, in-depth analysis and clear communication skills are all essential. 

What’s Happening, and Did We Expect it?

In a sense, FP&A work is grounded in the budget versus actual process. Not in terms of a checkbox exercise, but an in-depth process that seeks the connections and causes for variance and connects them to wider industry, market or company trends. 

FP&A teams track the actual numbers in real time or close to that, and analyze the gap between the reality and the budget (while avoiding common pitfalls). In that way, analysts can make recommendations about how to adjust expectations, methods and tactics to accommodate the shifting landscape. Where necessary, they can raise flags with relevant stakeholders about looming risks or variance, before they become practical problems. 

Tracking these kinds of figures is typically done on a fairly detailed level, breaking metrics down by factors such as region, product, productivity, line of business, etc. This requires centralizing data from across the company and beyond, and turning analysis into actionable reports that can be used by different functions in the business. 

Analysts today often aim to automate as much of this information gathering process as possible, and dedicated FP&A platforms such as Firmbase are becoming increasingly popular to help teams avoid human errors and manual tasks, streamline information gathering and ensure that both analysis and rolling forecasts are done on an ongoing, continuous basis. The more specific, the more grounded in context and the more timely recommendations can be, the more impact they can have. 

FP&A Analyst Work Ebbs and Flows in the Year

Some times in an FP&A analyst’s year are busier than others. At various points in the year or quarter, depending on the company norms, FP&A analysts will also often be responsible for helping ensure that business partners in other departments have provided accurate data, processed invoices in a timely manner, etc. Without this, analysts may not have the data they need. 

On the other end of the process, there’s forecasting, which is looking ahead and combining both internal and external data to predict probable future trends and results, usually with scenario planning to cover pessimistic, optimistic and standard forecasts. FP&A analysts will generally aim to provide detailed due diligence for this process, to ensure a clear trail of evidence and data is preserved for the organization. 

As well, on an ongoing basis, FP&A analysts will often have time set aside in their week or month to consider how to improve existing processes to increase efficiency and productivity. This may well include regular brainstorming sessions with other analysts. 

What Does an FP&A Analyst Do Across the Business?

Some FP&A teams are structured such that many of the team members act as business partners to other parts of the organization. In these cases, the FP&A professionals typically spend most of their time with another department, helping to ensure financial planning and analysis are an inherent component of strategy and daily operations there. 

Even in companies where this isn’t the case, it’s inherent to the value of the FP&A function that they have a uniquely detailed cross-departmental perspective. It’s a fundamental part of the role, which involves tracking results across the company and understanding why they are what they are. 

Cross-departmental Relationships

Cross-departmental relationships are unusually important for FP&A analysts. For this reason, many analysts see it as part of their job to invest in interpersonal relationships with individuals, teams and departments over time. 

There are several aspects that are often part of this:

• Professional interactions on shared projects, collaborating to achieve common goals. 
• Assisting other departments with their projects, using FP&A perspective and skills to help them achieve their goals more effectively or successfully. 
• An educational component, such as brown bag or lunch and learn sessions, monthly newsletters or even internal podcast episodes. 
• An interpersonal component, with coffees, water cooler chats, time taken for games or activities, etc. 

Collaboration is key to success for FP&A analysts, and is a skill worth investing in. It more than repays the time and effort it takes. 

FP&A Teams Vary Between Orgs and Over Time

There’s no single best way to set up an FP&A team, or to divide up responsibilities. For instance, in some organizations, cash forecasting and budgeting might well sit within FP&A as primary responsibilities. In others, though, cash forecasting might belong to treasury, and budgeting to the controlling team, with FP&A analysts assisting as appropriate. 

It’s about what makes sense for the organization – which is also something that may change over time. 

In the same way, business partnering, with its focus on the immediate needs and decisions of the business, and longer term financial planning, are both likely to be key elements of the role of FP&A within the organization. But which aspect gets the most focus, and how these two elements are divided up, may vary. 

In some businesses, there are team members focused entirely on business partnering, and others focused solely on financial planning. In others, team members have responsibilities defined by product line, or the department they work most closely with, or some other focus, and are expected to fulfill both business partnering and financial planning roles within that area. And so on.

The balance between the immediate and the long term also shifts over time within a business. Young organizations tend to need to emphasize the short term. Businesses exploring M&A opportunities need to model long term scenarios. Organizations in the early months of the pandemic needed to focus on the short term before looking at long term possibilities.

There’s no one right answer to any of this. What matters is to be thoughtful, intentional and clear about your organization’s goals and priorities – and to make sure that the structure of the FP&A and finance team, and the daily work of FP&A analysts, supports them.