What does an FP&A Professional Do?

Written by Emmanuel Jibodu

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Source: flickr.com

When asked at a social event by friends or new acquaintances what I do for a living, I often indicate that I work in the accounting department for a large company. Usually, I prefer to not expound on the ins and outs of my work because the field of Financial planning & analysis is still obscure to the average person.

A Financial planning & analysis (FP&A) professional is not as universally recognized as a doctor, lawyer, architect, engineer, or even accountant. This is likely to change in the coming decades as more companies hire FP&A professionals to help their executives effectively navigate a global business landscape that is fraught with uncertainty, volatility, regulation, and hyper-competition.

The FP&A arm has been an integral part of the Chief Financial Officer’s (CFO) office for decades but has risen in prominence in the last 5 years because of the risks and opportunities that organizations are facing today. Here is the typical scenario when I am speaking to a new acquaintance about my vocation:

New acquaintance (Jeff): What do you do for a living Emmanuel?

Emmanuel: I work as a financial planning & analysis professional.

The direction of the conversation after my answer goes in two directions: (1) the subject is changed (sometimes because the person does not want to appear uninformed). (2) My new acquaintance asks, “What does that involve?” In an ideal situation, I would like to list the following, but rarely do:

  1. Translate the corporate strategy into numbers (financial information)
  2. Forecast the future financial performance of the company
  3. Assist the accounting department to have a timely monthly close
  4. Prepare board reporting packages
  5. Analyze product or division profitability
  6. Provide analysis to support the purchase or sale of a division/company 
  7. Prepare the company’s budget

In order to avoid listing the aforementioned scope of an FP&A practitioner’s role, coupled with the fact that most people are not familiar with the profession, I usually would say, “I work in the accounting or finance department for large corporations.”

In some cases the scenario plays out like this:

New acquaintance (Jeff): What do you do for a living Emmanuel?

Emmanuel: I work as a financial planning & analysis professional.

New acquaintance (Jeff): Ah…yes…A lot of a my friends are business analysts as well…Nice

Emmanuel: No…no…no…financial planning & analysis and business analysis are disparate fields…they are not the same thing.

When asked what an FP&A role professional does by individuals who are IT project managers, I have been able to provide an apt response.

Emmanuel: The FP&A function is an arm of the CFO’s office…It is similar to the way that the project management function is an arm of the Chief Information Officer’s (CIO) office. A CFO oversees all the financial functions of a company including FP&A, accounting, treasury, tax, financial reporting, etc… The FP&A arm provides insight to the CFO helping she or he to optimize the decision making process for the C-suite.

IT Project Management Professional: I see some similarities.

Recently, I have finally been able to develop an answer that I am convinced is good enough to answer the question about what an FP&A role entails:

New acquaintance (Jeff): What does an FP&A role entail?

Emmanuel: What we do is to continue from where the accounting team stopped. The Accounting team records what has happened in the company… sales, costs…what the company owes and owns…their perspective is historical. FP&A is more forward looking…we analyze the information prepared by accounting to predict what is likely to happen in the future or forecast what could happen with regards to items such as sales, costs, and the overall organization’s performance…we also analyze which of the company’s products, customers, or lines of business are the most profitable… This helps senior executives ascertain what the overall health of the company would be like in the future (I like to use this line about “health” when talking to new acquaintances who are doctors or other health care professionals to give them a better idea). Our work guides C-suite executives to make data driven decisions…to allocate resources effectively and not to make decisions solely on past financial performance, gut feeling, or intuition…the entire purpose is to contribute to the growth of the company and the benefit of shareholders…and stakeholders

New acquaintance (Jeff)That makes a lot of sense. Thank you for explaining.

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One thought on “What does an FP&A Professional Do?

  1. Great Article Emmanuel!! Your explanation was very helpful. Helps people like me just starting their careers understand the role better.

    Like

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