What Does Financial Planning Analysts Do? Exploring Their Role

A team of financial planning analysts collaborates in a strategic meeting, engaging in discussions over financial data and projections. This image captures the essence of teamwork and analytical expertise in financial planning.
Table of Contents

Introduction:

FP&A is a vital function for businesses of all sizes in India. However, the scope of work differs from company to company, depending on size & industry. The smaller the company, more generalized the function is ie. you get to involve yourself more closely with business decisions in multiple departments.

Diagram illustrating the bridge between business teams and senior management through the Financial Planning and Analysis (FP&A) team. It details the core functions of FP&A including planning and budgeting, forecasting, reporting and analysis, management commentary, and data manipulation.

The role of individuals in FP&A extends well beyond basic budgeting, forecasting, and planning. As the central link between various teams, FP&A professionals are pivotal in business operations. Every business decision has a financial aspect that requires validation and approval by the Business Finance or FP&A teams, ensuring that all actions align with the company’s financial strategies and goals.

Also Read: What is Internal Audit? Why does it matter?

Some of the key responsibilities of FP&A professionals include:

● Preparing financial reports & budgets,
● Analyzing financial and operational data to gather insights,
● Developing financial forecasts & plans,
● Providing financial advice to management & approving all major expenses (POs),
● Supporting business decision-making through prudent financial planning,
● Managing financial & business risks through stress testing all numbers.

Meme image titled 'Welcome to Corporate Finance' featuring a man holding a note, humorously stating 'where the answers aren't real and the numbers are made up', illustrating the complexities and humor often found in Financial Planning and Analysis

For instance: A senior FP&A manager work responsibility may include chairing the company’s capital expenditure approval committee. In plain language, the monthly/weekly session where you will review all capex proposals > INR 50k for approval.

Now, for each capital project you have to wear 5 different hats:

  • Leader – Judgment on alignment of project to strategy, and review their financial case
  • Driver – Ensuring resources in place to execute project and deliver the payback
  • Operator – Ensuring the correct depreciation policy is applied by controllership/accounting teams
  • Financier – Agreeing the plan for funding the project along with the rights & obligations.
  • Custodian – Formal approval of the capex (and ensuring it can’t be released without approval)

This was just an illustration but there is so much more!

There will be business cases (esp. in startups & business finance roles), where you will also be required to actively negotiate terms of trade with your vendors, clients etc. You will also be required to program manage certain important contracts between the business team, legal team, tax & finance teams, while juggling your daily routine work 🙂

A humorous Bollywood meme scene featuring two characters. One man, dressed in white, is instructing a younger man in a pink sweater, saying 'Fata-fat yeh kaam khatam karoge... Toh dusra kaam milega', which translates to 'Finish this work quickly... then you'll get another task.' This captures the comedic and endless cycle of tasks in many work environments

Common Reports and Reviews Handled by FP&A Professionals:

1. Planning & Budgeting:

  • Annual Operating Plan (AOP): Comprehensive yearly planning.
  • Quarterly Plans: Detailed planning conducted every quarter.
  • Budgets: Prepared monthly or quarterly to manage spending.
  • Headcount Planning: Forecasting staffing needs.
  • Long Range Strategic Planning: Long-term strategy development.

2. Reporting & Analysis:

  • Operational Reporting: Monitoring day-to-day operations.
  • Financial Reporting: Tracking financial health and compliance.
  • KPIs: Key Performance Indicators to measure success.
  • Dashboards: Visual displays of data and trends.
  • Variance Analysis: Comparing expected outcomes to actual results.
  • PVM Analysis: Price Volume Mix analysis to understand sales dynamics.
  • Drill-through/Roll-up/Drill-across Reports: Techniques for exploring data details and summaries.

3. Forecasting:

  • Rolling Forecasts: Updating forecasts regularly to reflect new data.
  • Trend Analysis: Analyzing patterns in data over time.
  • Predictive Analytics: Using statistics and modeling to predict future trends.

4. Financial Modeling:

  • What-If Analysis: Exploring hypothetical scenarios.
  • Scenario Analysis: Assessing potential future events and their impacts.

If you’re starting out your career, you will be actively preparing a lot of them, every week/month. If you’re already an experienced professional, you will be actively reviewing a lot of them, for final submissions.

And once you’re VP/CFO of the company (lets just say, the top brass), you will be directly taking decisions on the basis of these reports & submissions. The numbers driving these models will directly impact the way companies pivot in their lifecycle. 

If this has gotten you worried too much, here’s a meme to conclude:

The image is a screenshot of a tweet by a user named Amy. The tweet contains a humorous exchange between her and her dad on an airplane. When a flight attendant asks if there's a doctor on board, Amy's dad nudges her saying that should've been her. Amy responds with "Not now Dad." Her dad quips that they're not asking for an accountant, to which Amy replies that there's a medical emergency happening. Her dad then humorously suggests she go see if the VLOOKUP function, a tool used in Excel, might help with the situation.

Conclusion and Additional Resources:

Preparing for an FP&A interview requires not just knowledge and skills, but a strategic approach to showcasing your qualifications. Our Financial Planning & Analysis Masterclass is designed to provide you with comprehensive training that covers all aspects of FP&A, from fundamental concepts to advanced financial modeling techniques. This masterclass will help you build confidence and enhance your abilities to tackle even the most challenging interview questions effectively.

Ready to take your FP&A career to the next level? Enroll in our Financial Planning & Analysis Masterclass today and gain the edge you need to succeed in your next interview. Enroll Now

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