Financial Planning and Analysis (FP&A) is a central part of corporate finance, as they are the team within a company that is responsible for financial planning, budgeting and forecasting for the company’s various programs. Although it is part of the financial department of the company, they are mostly comprised of financial planners and analysists than accountants. We will explore the differences below.
What Does an Accountant Do?
An accountant is responsible for creating financial records and documentation on the basis of the accounting standards of the company they work for, and the accounting standards of the country that the live in. They are also responsible for analyzing, tracking and inputting an organizations economic and financial activities in order to convey the information in a way that is concise and useful to the organization’s management and stakeholders.
What Does an FP&A Analyst Do?
A member of the FP&A team is responsible for gathering historical financial data in order to project future outcomes of business ventures, as well as consolidating any changes and compiling reports based on the findings. They have a supportive role within a company, as they act as financial advisers and intermediaries between other departments by providing management and executives with input as to the best metho of achieving maximum profitability. To do so, they will need to have an in-depth knowledge of accounting principles.
The tasks of an FP&A Analyst:
There are three main roles that a member of an FP&A team could have, namely either an FP&A Manager, a Financial Analyst or an FP&A director or vice president. The tasks that they perform will vary from position to position, but can include:
- Fluent in Excel, Microsoft suite and other programs
- Liaising between the operations team, corporate team, partners and managers at all levels within an organization
- Reviewing, consolidating and fixing financial data and projections
- Creating profit and loss statements
- Calculating profit margins
- Projecting financial outcomes of different scenarios based on historical financial data
- Presenting reports to management and board of directors
- Quickly gathering and organizing data as needed
- Consolidating plans and data from various departments into a final plan
- Monitoring project and budgeting each month until each project’s completion
FP&A vs. Accountant – What’s the Difference?
The main difference between an FP&A professional and an ordinary accountant is that an FP&A analyst is mainly involved for forward planning and budgeting based on historical data, whereas an accountant is more involved with processing current financial data in order to create reports that are compliant with company and governmental accounting standards.
|Uses financial documents to project future financial events||Uses past transactions to create financial documentation|
|Focused on future growth of the company||Focused on day-to-day running of the company|
|Management reporting||Financial reporting|
|Internal reports (managers & business partners)||External reports (investors & government)|
|Long-term focused||Short-term focused|
|Requires adjustments based on on-the-fly changes||Requires absolute accuracy|
|Reports based on business cycles||Reports based on financial cycles|
|Gathering and processing historical data||Recording financial transactions|