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Mastering FP&A processes is truly transformative for any business

FP&A For Startups – What It Is, and Why It Matters

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Every round of new hiring at a startup is an exciting moment - it shows that you’ve had the success needed to fuel your growth. Choosing what hires to prioritize can be tricky, as you have to carefully balance new salaries with the expertise and ability you are bringing on board.

One of the most impactful resources that will power the growth of your business is a Financial Planning and Analysis (FP&A) specialist. A good FP&A professional will help your company make strategic plans that are driven by hard data. This will help you better steer your company away from risk and towards opportunities and goals. 

In this article, we’ll explain the value of FP&A in a finance department, examine its various processes and provide tips for implementation. 

What is FP&A? 

FP&A stands for Financial Planning and Analysis. This is the process by which you build a forecast of your startup’s profit, loss, and operating performance for the future. By analyzing your accounting data, an FP&A specialist can help you to make informed decisions on budgeting and strategy. 

Why FP&A Is Important For Startups 

One of the most important benefits of FP&A for any company is the ability to get a better handle on your cash flow and annual budget. An FP&A partner will be able to give you the guidance you need to maximize your working capital and avoid situations where you end up suddenly cash-dry. By getting someone who knows how to do financial planning and analysis to build your financial modeling, you’ll be in a great position to grow with confidence. 

FP&A Activities For Startup Health

So what exactly does an FP&A team do? And how do they do it? FP&A encompasses a wide variety of activities and there are many methods of how to do financial planning and analysis. Following is a quick list of some of the skills that a strong accounting team can bring to the table. 

Budget Planning 

A strategic budget is central to the success of all growing startups. Your accounting team will be able to help you design rolling budgets that don’t just suit your company at the current point in time but are able to adapt to the realities of events down the road. A good FP&A lead can also build budget models to take into account anticipated changes, both external and internal. 

Integrated Financial Planning

Integrated Financial Planning is one of the more complicated parts of financial planning. This involves making strategic decisions on expenditures in all parts of your business, not just accounting. Sales, marketing, operations, tech, and research will all be given clear guidelines for budgeting, and be set up to return clear and constantly up-to-date feedback to the accounting department. 

Performance Management

Performance management involves the creation of goals and targets in select areas of your business. A strong accounting team or outsourced CFO will be able to pick out the most important trends in your business to hone in on. This kind of big picture planning could involve setting targets for sales, cost-saving, pricing, portfolio, or client acquisition. This allows you to understand what the most realistic and useful goals are to set and give you constant feedback on how progress is being made towards them. 

Forecasting and Modeling

Not only can a strong FP&A team give you immediate goals to work towards, but they can use financial modeling to forecast where your company will be in future years. This glimpse into the accounting crystal ball can give you the insight you need to support decisions - and is very useful to present to potential investors as well. 

FP&A Tool Suggestions

As you can imagine, FP&A has a lot of moving parts. Financial modeling needs continuous updating to remain useful, and without the best software and financial modeling tools, this can be a huge hassle. Here are some of the better-known tools - of course, the best way to find the best tool for your business is to collaborate with your FP&A partner.

NetSuite

NetSuite is noted as one of the first Enterprise Resource Planning systems put to market. NetSuite includes programs to monitor ERP, financial modeling, inventory management, human resources, supply chains - and more. NetSuite is also noted for the amount of automation for core processes involved, freeing you up to focus on analyzing its real-time insights. 

Vena

Vena is an increasingly popular FP&A platform since it operates as an add-on to the very familiar Excel interface. For any team member familiar with Excel, it is easy to pick up Vena. The platform allows for simple but extensive automation.

Workday Adaptive Planning

Workday Adaptive Planning is an online FP&A platform, specializing in budgeting, forecasting, and reporting. Since it is an entirely web-based SaaS, there is no need to make a new hardware or software purchase. As the name suggests, Workday is designed to be adaptive, and be suitable for businesses of any size.

Don’t Have The Time or Resources to Manage your FP&A?

A strong financial analyst can be a true game-changer for your business. At Punch Financial, we provide as-needed CFO accounting and financial strategy services. Every account with us is assigned an accountant, director, and CFO - giving you all of the skillsets you need to find out your key metrics and build automation into your financial planning. 

Our goal is to help you streamline your accounting and give you the data and systems you need to reduce your overhead. Contact us today to book a consultation.

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