According to the Bureau of Labor Statistics, only 25% of new businesses make it to the 15-year mark–and two of the main reasons for failure before that time are poor planning and financing. Whether your business is new or more seasoned, knowing at least the financial planning and analysis basics can put you in a better position for long-term success.
If you are hoping to remain in good financial health and continue to grow and scale, it is important to learn the basics of FP&A.
FP&A connects financial planning with operational planning so you’re doing more than just predicting positive results–you’re more accurately measuring progress toward meeting defined success targets.
While the term “financial planning and analysis” seems fairly straightforward in meaning, there is a lot more to it. Just take a look at this definition from Gartner:
“Financial planning and analysis is a set of four activities that support an organization’s financial health: planning and budgeting, integrated financial planning, management and performance reporting, and forecasting and modeling. FP&A solutions enhance the finance department’s ability to manage performance by linking corporate strategy to execution.”
That definition is a bit of a mouthful, but it gives us a lot of valuable details to unpack. We’re going to explain the key components of FP&A activities defined in the Gartner definition, but first, let’s discuss why FP&A is such an important function for your business.
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The imperative for financial planning and analysis comes down to one word: Future.
Organizations are becoming increasingly forward-looking as a result of a faster pace of business, heightened competition, increasing customer demands, expanding technology capabilities, and influxes of rich data.
To bring greater predictability to the future, financial planning and analysis uniquely links finance with business operations; rather than rely on historical data to anticipate future sales or revenue, FP&A now enables insightful predictions and analytics that can directly impact business strategy.
This function of using data to predict future outcomes is really what differentiates financial planning and analysis from accounting, which uses historical data to determine a company’s present status. Accounting is important for overall business function, but FP&A augments that work to support business growth, identifying areas for greater efficiencies, investment, or savings.
The ongoing nature of financial planning and analysis demands a solution that can scale with your organization. Business growth, market fluctuations, and industry expansions all require greater data collection and analysis, which is essential to support long-term business success.
It’s a continuous cycle that can only be truly mastered using a single platform solution that automates FP&A activities and creates enterprise-wide visibility.
Contact us today to schedule a demo and learn more about our all-in-one solution for financial planning and analysis. Powered by the Salesforce Cloud platform, FP&A from Certinia enables teams to run a connected business and puts your customers at the center of everything you do.