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Step-by-Step Checklist to Build the Most Efficient FP&A Team

Finance teams

Save billions of dollars by implementing this step-by-step checklist to build the most efficient FP&A team for your organization.

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Priyaanka Arora
September 16, 2022

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Step-by-Step Checklist to Build the Most Efficient FP&A Team


“High-efficiency FP&A teams are positioning themselves as trusted business partners: a capability the key stakeholders have been looking for from the finance functions.”

FP&A teams have always been a key value-add activity in finance. 

Traditionally, the role of the FP&A department was focused on standardized reporting, analysis, and projections. Over time, the FP&A landscape has changed dramatically. 

The advent of technologies like big data, improved analytics, advanced data visualization, and AI are elevating the demands and expectations of finance teams. 

Today, FP&A teams are expected to do much more than look at past data and create forecasting reports. CFOs expect their FP&A teams to:

  • Churn out actionable insights on business drivers
  • Caution against roadblocks 
  • Prepare for future scenarios
  • Roll out accurate forecasts 
  • Visualize data 
  • Conduct performance analysis (including benchmarking and KPIs)

High-efficiency FP&A teams are positioning themselves as trusted business partners: a capability key stakeholders have been looking for from the Finance function. 

In this article (part 2 of our 3-part series), we share a detailed checklist of how to convert your team into a high-efficiency FP&A machine. Throughout this article, we take a closer look at how to build FP&A teams that are highly impactful and efficient.  

Recap: Why is it so important for FP&A teams to be efficient?  

On average, organizations lose $7.8 billion every year on inefficient FP&A data processes. This is largely because many FP&A teams still rely on legacy processes — like generating reports as spreadsheets, which makes it difficult to update data, especially when the inflow of business information increases exponentially. 

High-pressure workloads are a result of inefficient processes and nearly 85% of finance professionals have been seriously impacted by burnout. What’s more, FP&A teams are not only responsible for predicting results but also driving them.

You may wonder how teams can drive accurate predictions and results time after time without harming the mental and physical health of employees? 

The answer is through efficient processes. And efficiency leads to long-term sustainable impact. Inevitably, it becomes the responsibility of leadership to create a long-term sustained impact. The right way to do so is by building a highly efficient team culture and ensuring that the FP&A function is not boggled down by inefficient processes.

Step-by-Step Checklist to build the most efficient FP&A team

#1. Centralize data from varied sources to perform analysis 

In the FP&A organization structure, incoming data can be from multiple business applications: 

  • ERP and accounting systems 
  • CRM
  • HRIS + ATS
  • Billing and payment systems
  • Data lakes and warehouses
  • Customer service management tools
  • Spreadsheets, including Excel and Google Sheets
  • File storage systems

When data from several sources is siloed and presented in a spreadsheet, it can lead to inefficiencies and errors during data consolidation and data handling. To solve this problem, centralize data into a financial modeling platform that acts as a single source of truth.

You can leverage data integrations for nearly every type of data source possible. These data integrations and connectors have the added benefit of allowing you to schedule data imports, ensuring the latest data is available to you at all times.

#2. Ability to flexibly make changes to any model 

Business leaders are now required to course correct within hours and days, not weeks or months. That means strategic FP&A teams need to assess key drivers and their impact quickly. Being trapped in manual processes for hundreds of variables across dozens of models can put your business at the risk of not gaining complete visibility on the path forward. 

The ability to flexibly make changes to any model eliminates rigidity in importing or dimensions, thereby increasing the velocity of your reporting and forecasting. It allows you to run what-if scenarios in minutes, easily change scenarios and rapidly analyze the breadth of scenarios to ensure business continuity. To easily comprehend the data, results can be presented in the form of beautiful tables and waterfall charts.

#3. Optimal user flow 

How often have you found yourself chasing after multiple teams for data over endless email threads? Or has your data been buried amid fragmented communication channels?

You’re not alone. Data collection from cross-functional departments is one of the most common challenges faced by FP&A teams. 

Highly efficient FP&A teams use personalized workflows to gather data from several sources, track progress and optimize the team processes. Increasingly, businesses are replacing spreadsheets with better financial modeling

#4. Understand data from aggregation and drill-downs 

Save your team’s time by: 

  • Identifying different components of your formulas 
  • In case of input or model changes, manage and track version history 
  • Scenario modeling to highlight where your numbers come from 

#5. Gather inputs from different planning partners 

One of the key FP&A objectives is to synthesize financial and non-financial data to create a consistent fact base that can lead to informed critical business decisions and improve organizational performance. 

For example, FP&A teams work with IT and operation stakeholders to build and manage data lakes containing general financial data, inventory data, sales data, and more. They also review and approve other teams’ budgets. In several ways, the FP&A department is responsible for collating facts and figures and giving them in real time to business leaders who are charged with improving KPIs. 

#6. Adding new products, markets, and vendors

The FP&A department plays a critical role in the organization by providing timely and accurate advice to business leaders in terms of budgeting, analysis, forecasting, financial planning, and cash flow management. 

The major role of FP&A in company enablement entails: 

  • Identifying products that have the highest profit margins and yield the largest net profit
  • Assessing key financial ratios like current ratio and debt to equity ratio to evaluate financial health
  • Collaborating with several departments on their budgets and integrating them into a single budget
  • Evaluating the best technologies to invest in, ideal markets to expand into, opportunities for growth, and generating monthly/quarterly and annual financial forecasts

Investment in a financial planning and analysis platform can help the team become more efficient when carrying out these key duties. With more powerful and flexible modeling, high security standards, and a modern interface, a platform such as Pigment can cut down significantly on time spent on non value-add tasks.

#7. Preparing management reports 

FP&A leaders are pressed to deliver actionable insights, accurate forecasts, and high-quality decisions, often with limited resources. Business planning and analysis software dramatically increases the speed and visibility of financial reporting, enabling you to keep the leadership team informed and investigate the latest trends. 

Simplifying your data preparation process frees up the headspace so that you can focus on what matters the most. 

Highly efficient FP&A teams spend the majority of their time analyzing and reporting data to make better decisions. Detailed reports, plans, and forecasts with real-time data give a 360-degree view of your business. 

You can delegate the grunt work of importing data, cleaning it, and enriching it from multiple business applications to software rather than sourcing it manually.  

#8. Reforecasting and adjusting models 

Reforecasting, a core principle of strategic finance, is defined as the process of revisiting the annual budget when there is a significant deviation from the projected spend or income. 

Especially for fast-growing companies, simply reviewing your numbers based on normal accounts will not help you sustain. Reforecasting your budget regularly allows you to avoid unwanted costs and adapt to unexpected events that can disrupt your cash flow. 

To make sound business decisions, FP&A teams should acquire updated information for your budget. Even a detailed look at the profit and loss statements can help you understand where your organization is failing and point out the exact areas that are thriving. Based on this data, you can make necessary adjustments to focus on areas/services/products that are bringing results. 

The best part is that an accurately forecasted budget assists decision makers within your company with leveraging funds, where to allocate more funds, or reducing funding from non-producing assets of your business. 

#9. New hires need to understand and manage existing models 

New joiners are commonly faced with the mammoth challenge of understanding models which are located across multiple spreadsheets. The result? It takes them a long time to ramp up. 

But with a dedicated business planning and analytics tool, data is organized in a better way and easy to understand. What makes these tools widely popular is that they allow collaboration within the platform, asking questions, and coordinating with different teams. 

#10. Answering questions from planning partners 

One of the key functions of FP&A is budgeting for other teams. If you are a part of the financial planning and analysis department, most probably, other planning partners will ask you budgeting questions. 

Let’s look at a simple example of the sales leader asking you about the headcount plan. Normally, in the absence of business planning software, you’d have to manually sift through emails from different department leaders. But with a tool in place, finance teams can collaborate with cross-functional leaders without having to leave the platform. As a result, you can collate all questions and bring teams together with commentary, notifications, and shareable workflows. 

What does a highly efficient FP&A team look like? 

In conclusion, high-efficiency FP&A teams emphasize: 

  • Improved processes to drive performance - As a first step, they identify inefficiencies and smoothen them out. This could range from small improvements like reducing manual work, updating data storage, and reducing silos to major changes like improving financial performance reports, or better document management.
  • Investing in technology to deliver deep insights - A second lever to building an impactful FP&A team is making key technology investments. Automating tasks like budgeting and forecasting models, what-if scenarios, workflows, and preparation of management reports save the team’s time which is better spent on impactful analysis to drive decisions. 
  • Developing talent beyond core financial capabilities - The role of the FP&A department continues to evolve to become more of a strategic business partner and challenger. With this, organizations are investing in developing talent that can identify key performance indicators, evaluate competitive dynamics affecting key financial trends, and influence organizations to steer financial resources towards high-value activities. 

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