FP&A (Financial Planning & Analysis)
Definition
Financial Planning and Analysis (FP&A) is the process of budgeting, forecasting, and analyzing a company's financial performance to support strategic business decisions.
Explanation
FP&A teams are responsible for creating budgets, developing financial forecasts, analyzing variances between actual results and plans, and providing insights to leadership. They play a critical role in strategic planning, resource allocation, and performance management.
Modern FP&A uses data analytics, scenario modeling, and business intelligence tools to provide forward-looking analysis. The goal is to help the organization make informed decisions about investments, cost management, and growth strategies.
Example
An FP&A analyst creates a 12-month cash flow forecast, identifies a potential shortfall in Q3, and recommends cost reduction measures or a line of credit to management.