Financial planning is essential for the success of any company. It supports the business plan and establishes a process to ensure that the established objectives are financially achievable. Proper financial planning and analysis allows you to understand how well you project your company will work and measure your success in relation to that projection. The process is ongoing and should serve as an intelligent guide for managing your business. Financial planning and analysis teams (FP&A) play a crucial role in companies, as they prepare budgets, forecasts and analyses that support the main corporate decisions of the CFO, the CEO and the board of directors.
If you become an FP&A professional, you'll work within an organization and perform budgeting, forecasting, and financial analysis to provide the CEO, CFO, and board of directors with solid financial information to help them make business decisions and strategies. FP&A professionals oversee a wide range of financial matters, including revenues, expenses, taxes, capital expenditures, investments, and financial statements. One type of financial modeling is scenario planning, a process in which FP&A employees plan the best possible, expected and worst scenarios by entering different sales numbers and order volume to see how they would affect the company's financial situation. In addition, if you need funding or funding, the FP&A function prepares you to submit the financial section of your business plan in a relatively short period of time. This results in faster planning cycles, more sophisticated models, more accurate forecasts, and better predictive planning that drives lasting success. Very few, if any, companies can be consistently profitable and grow without careful financial planning and cash flow management. FP&A's more forward-looking responsibilities include budget planning and forecasting the company's future financial performance.
It relies heavily on statistical analysis to measure and plan business operations and forecast their financial impact, taking into account internal variables, but also broader demographic and economic trends, as well as subjective and qualitative evaluation. A good analyst not only understands the meaning and implications of each individual financial statement, but also sees the big picture of how a company's total financial position is reflected in the combination of assets, liabilities, cash flow, and revenues.