Companies optimize their current and future activities through financial planning and analysis.
FREMONT, CA: Executive teams and the board of directors rely on financial planning and analysis (FPA) for financial planning, budgeting, and forecasting process to make important decisions. Employees utilize data from analysis to make reports, find solutions to business challenges and predict trends. They aid in maintaining and mitigating cost deficiencies, savings, growth opportunities, and investments.
Companies require unique and customized analysis and financial modeling to plan their operations. The following functions are common FPA activities.
Profit and loss: The FPA team assesses the company's financial activities. They use this data to create profit and loss statements, board reports, and management reports. Management reports include a wider area of coverage of a company's functioning. They conduct variance reports which track budget and actual spending by department and cash flow statements.
Profit margin: FPA employees analyze reports to understand which product or service has the highest profit and returns on investments (ROI). They study a company's spending and investments and find new investment routes.
Budgeting: FPA teams study data to form a budget. They allocate money to different departments and create financial models to allocate the necessary funds. They forecast financial activities and trends within the business and economy that can affect revenue and profit. Smaller teams forecast financial activities for a shorter timeframe in the future, and larger companies plan budgets for the long term. FPA forms budgets to streamline a company's financial performance.
Scenario planning: FPA teams plan and predict best-case, expected, and worst-case scenarios by integrating sales information and data on order volumes to predict its impact on the company's financial position. The team utilizes this information to identify steps to respond to different expected outcomes and better prepare a business for the future. Efficient FPA teams rely more on predictive strategies to plan capital expenses and other investments.
Ad-hoc reporting: Controllers of a company usually request detailed KPI reports. FPA teams use data regularly to populate effective reports to submit to management. Reports and financial models give FPA teams information for accurate and actionable recommendations to senior management.
