Every savvy business leader knows the value of having a well-run bookkeeping or accounting department. However, not everyone is aware of how important it is today to have a financial planning and analysis (FP&A) team to help back their business with effective and accurate financials.
Accounting professionals and members of the FP&A team play distinct and vital roles in guiding executive decision-makers and enhancing the financial well-being of an organization. Each brings a unique and critical function to the table within the company.
Bookkeeping Roles VS FP&A Roles
The Bookkeeping Snapshot. The bookkeeping team is responsible for tracking and recording all financial transactions. This ensures there is an accurate record of financial statements provided to investors, creditors, internal and external stakeholders, and other interested parties.
These records are used to generate tax returns and drive short-term and long-term planning goals, as well as financial statements. In a nutshell, the bookkeeping team views every transaction through an inside-out lens.
The FP&A Team. The FP&A Team, on the other hand, views everything from a more granular view, delving deeper into market changes, inefficiencies in workflow patterns, defects in strategy that need correction, and other issues that are limiting performance or revenue generation.
Members from the financial planning and analysis team are typically assigned to specific senior leaders or managers to explain their discoveries in detail, resulting in opportunities to correct inefficiencies or adjust forecasts in real-time as needed.
Additional Savings From Financial Planning & Analysis Partners
The FP&A team conducts a thorough review of daily financial transactions, enabling them to identify trends and patterns in the data faster than their accounting counterparts. Through their analysis of data and key performance indicators (KPIs), they can promptly notify business owners and managers of opportunities to enhance revenue potential and save money.
Automation
The FP&A team works closely with a company, monitoring internal processes, simplifying as much as possible, eliminating duplication where possible, and automating routine tasks to reduce overhead and streamline operations.
Implementing Stronger Financial Control
Encouraging financial control throughout an organization is a top priority for the financial planning and analysis team. FP&A team members will work closely with the accounting department to ensure that company standards for purchasing and receiving are followed and any sudden increases or decreases in inventory are investigated promptly.
Monitor KPIs For Better Forecasting
One major advantage of onboarding an FP&A team is having someone to closely watch KPIs, especially during our current economy. As the cost of goods sold continues to rise, it is critical to know if it is the price of the product, the cost of a product, the freight, or some other factor that is driving the internal cost of production hitting the gross margin.
Having those KPIs broken down to the granular level gives valuable insights when it comes time to replenish supplies or renew your shipping contract.
Comparing Accounting & FP&A
Accountants typically focus on the general ledger system, recording daily financial transactions. They handle incoming payments, and manage the supply chain, purchasing, inventory, and accounts payable. This role is trusted for providing an auditable trail of financial reports. Accounting processes are investor and finance customer-focused.
FP&A professionals have transitioned to enterprise resource planning (ERP) and business intelligence tools that allow them to analyze data and key performance metrics to guide financial decisions. Their decision-making and guidance are based on explanatory and exploratory tools – business data. FP&A strategies are business and business-focused.
FP&A Roles
FP&A team members work closely with leaders throughout an organization to improve the financial health of the company. The primary goal is to clearly articulate “assumptions underlying the key drivers” responsible for certain business successes or struggles at any given time. Other duties include:
- Ensures alignment with teams and company financial goals throughout the company
- Establishing quantifiable expectations
- Defining financial and process priorities
- Identifying strategy flaws and implementing correction strategies as needed
- Creating contingency plans that allow for rapid decision-making if negative issues arise
- Creating an environment that empowers single-year learning to enhance forecasting
For more information on financial planning & analysis for your business, reach out to AccountingDepartment.com to see how an outsourced FP&A service provider can help you.
