FP&A (Financial Planning & Analysis)

FP&A (Financial Planning & Analysis) is a function that prepares forecasts and analyses to support management decisions. The professional connects financial data with business assumptions to inform the company's direction. In particular, they help assess the consequences of an investment, changes in financial results and options for allocating resources.

Their work focuses on the company's financial future. They draw on historical results, trends and information from operational teams to build models. Forecasts may cover profit and loss, cash flows and business performance. They help explain how the choices under consideration could translate into financial outcomes, with their underlying assumptions and limitations.

FP&A works with accounting, treasury, sales and other operational departments. The role usually reports to the CFO. Its scope nevertheless depends on the organisation: an analyst may contribute to models and reporting, while a manager coordinates a team and the planning cycle.

Defining FP&A responsibilities within the finance function

• FP&A prepares plans, forecasts and scenarios, then explains their implications for future decisions.
• To clarify how the role fits alongside management control, specify who builds forecasts and who analyses variances. Job titles alone are not enough to allocate this work.
• The chief financial officer (DAF / CFO) is the senior finance counterpart. The role described here provides analysis and decision support, without taking responsibility for leading all financial activities.

Accounting also provides an essential basis for understanding past results. When defining the hire, distinguish between the data FP&A needs to receive, the analyses it needs to produce and the decisions that remain with management.

The value of FP&A lies in the quality of the decisions it helps management make. A financial plan makes the company's direction measurable. An updated forecast incorporates new information. Scenarios explore several possible developments so that management can examine the consequences of the choices under consideration before making decisions.

These outputs therefore serve different purposes. The initial budget provides a reference for tracking agreed objectives. An updated forecast reassesses the trajectory using the available results and assumptions. A scenario changes selected assumptions to examine the associated risks or opportunities. Confusing them can make a variance difficult to interpret: is the company seeing performance that differs from its target, or a change in its outlook?

Analysis must also connect the figures to the activities that explain them. Consistent financial and operational indicators help show what happened, what it means and what to consider next. Reporting that simply lists results can leave management without an explanation it can act on. Conversely, a conclusion disconnected from the data or assumptions can create unjustified confidence.

Hypothetical example: a company is considering an investment as its sales become less predictable. FP&A compares several sales and expenditure assumptions. It sets out their effects on profit and loss and cash flows, then specifies which assumptions make the project riskier. Management retains responsibility for deciding whether to invest, change the project or defer it.

• Translate the company's direction into financial plans based on explicit assumptions.
• Build budgets and forecasts using historical results and input from operational teams.
• Update forecasts to reflect results and emerging trends.
• Model several scenarios to assess how sensitive results are to the chosen assumptions.
• Analyse variances between results and objectives to explain their implications for the financial trajectory.
• Assess the financial consequences of investments and projects submitted to management.
• Prepare dashboards and summaries that highlight risks and possible actions.
• Coordinate departments' contributions to the planning cycle within the responsibilities assigned to the role.

A grounding in finance and accounting prepares professionals for FP&A. It should enable them to read financial statements, understand results and connect business information to forecasts.

Modelling can be learnt using spreadsheets. ACCA, for example, presents a learning pathway that includes financial modelling in Excel and using data to inform strategy. This pathway is an option for developing skills, not a requirement for entering the role.

Experience as a financial analyst or accountant can prepare someone for a transition into FP&A. This transition requires a shift from historical data to future prospects: understanding trends, formulating assumptions and explaining how they influence the model.

The foundations of GetPro's assessment method

GetPro uses a framework that prioritises the role's criteria and specifies how each will be assessed. It distinguishes verifiable aspects of a candidate's background from skills to explore further at interview. Open questions are accompanied by a request for a concrete example to substantiate the answers.

Suggested applications for an FP&A profile

The following suggestions should be adapted to the analyses, working relationships and level of autonomy envisaged for the role. They illustrate one possible application of this framework to FP&A and do not describe a specific protocol used by GetPro.

1. Set the criteria before the interview

Define the expected outputs: a model, forecast, variance analysis or scenario summary. For each, specify whether the candidate will need to contribute, produce it independently or coordinate other people.

Build a shared assessment framework around financial consistency, the explanation of assumptions, data quality and the clarity of conclusions. Include a management criterion only for roles that carry this responsibility.

Distinguish skills needed from the outset from those that can be developed. Do not use an automation language as a screening criterion if the role does not use it.

2. Examine a past piece of work

Ask the candidate to describe a forecast they built or revised, without disclosing confidential data. Ask them to specify the information available, the assumptions chosen and their personal contribution.

Then ask what they learnt from a variance against actual results. Look for an explanation that connects the data, assumptions and model revision. Distinguish what the candidate did from what their team produced.

A precise account that acknowledges limitations is a positive sign. A presentation focused on the tool, without explaining the assumptions or the candidate's own role, calls for further questions.

3. Observe how they build a scenario

Hypothetical example: provide a simplified history of business activity and expenditure, an initial forecast and revised sales assumptions. Ask the candidate to update the forecast and compare two scenarios.

Ask them to explain the connections between business activity, expenditure, profit and loss, and cash, within the limits of the data provided. Ask which assumption they would vary to test the sensitivity of their conclusion.

Observe how they check the data and flag missing information. An assumption that is stated and discussed is more useful than a value added to the model without explanation.

Examine the reasoning as closely as the result. A consistent model whose calculations the candidate can explain is a positive sign. A categorical conclusion despite missing data deserves further exploration.

4. Test communication and coordination

Ask for a presentation to a non-financial manager. Have the candidate present the conclusion, the main risk and the decision the analysis can inform. Observe whether they adapt their language without concealing the scenario's limitations.

For a management role, ask how they would organise departments' contributions and the review of analysts' work. Explore a past disagreement about assumptions.

Look for an ability to discuss input and clarify who decides. An answer that confuses coordinating forecasts with authority over every department needs clarification.

5. Cross-check observations and references

Compare the exercise results with the work described at interview. With the candidate's consent, ask a referee to clarify the responsibilities held, the level of autonomy and the quality of communication with teams.

If you do not have financial expertise internally, have the model examined by a professional who can discuss its assumptions and calculations. Entrust the assessment of communication to the operational colleagues who will work with the candidate.

Finally, document established points and remaining uncertainties in the original assessment framework. Connect the decision to the work expected, distinguishing a need for support from a gap in an essential skill.