What Is Financial Planning And Analysis

When it comes to accounting and finance, there are a variety of career paths and expertise to pursue. The financial planning and analysis team assists in setting short and long-term objectives, conducting cost-benefit analyses, and conducting periodic reviews to ensure a company’s targets are fulfilled.

FP&A is one of the highest-paid careers in finance niches. As such, if you’re passionate about crunching numbers and carrying out analysis, then a career path as a financial planner and analyst might be a good fit for you.

In this article, we shall be looking at the career outlook in financial planning and analysis and how you can become one.

What is Financial Planning And Analysis?

Financial planning and analysis (FP&A) is the process of budgeting, analyzing, and forecasting an organization’s financial data to align the organization with its financial statements and to support the company’s strategic business decisions. It also allows an investor to determine whether the company is stable and profitable enough to warrant investment.

Financial Planning and Analysis (FP&A) teams are critical in firms because they perform budgeting, forecasting, and analysis that supports significant corporate decisions made by the CEO, CFO, and Board of Directors.

Corporate financial planning and financial analyst professionals use both quantitative and qualitative analysis of all operational areas of a firm to evaluate progress toward goals and map out future goals and plans.

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What Are The Benefits Of Working As An FP&A Professional?

Building a career in FP&A can connect you with a range of professional opportunities and personal benefits. Some of the benefits you can enjoy by working as an FP&A are:

1. Growth opportunities

FP&A professionals have a clear path to advancement and growth in the financial planning business. If you can demonstrate your expertise by providing sound financial advice in entry-level employment, you will have access to many opportunities for advancement.

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2. Stability

Working as an FP&A professional can provide consistent job stability because it plays a critical role in most firms. Employers rely on financial planners and analysts whether their organization is struggling or succeeding, making FP&A one of the most stable job options in finance.

3. Impact

Working in FP&A allows you to impact a company’s success directly. You can find personal contentment and fulfillment in knowing that your effort helps other individuals build their businesses and create jobs.

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What Are The Responsibilities Of A Financial Planning and Analysis Manager?

Below are some of the significant roles of a financial planning and analysis professional:

1. Profit Margins

Financial statement analysis is frequently used by FP&A professionals to determine which product lines or services have the best profit margins or contribute the most to net profit. They may also break out the cost and income or profit generated by each department within the organization. 

2. Profit and Loss (P&L)

The FP&A team is in charge of preparing P&L statements, board reports, and management reports such as variance reports, which track budget vs. actual spend by department, and cash flow statements.

Finalizing these claims necessitates gathering data from several departments (thus the need for business partnership skills) and then confirming and integrating that information.

The FP&A team uses this to calculate key financial indicators such as debt-to-equity ratio and current ratio, which will appear in these statements.

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3. Scenario Planning

Scenario planning is a sort of financial modeling in which FP&A professionals create best-case, expected-case, and worst-case scenarios by inserting in various sales and order volumes to evaluate how they affect the company’s financial condition.

Based on such findings, the team may determine actions it would take in reaction to various outcomes, better preparing a business for the future. According to an AFP/APQC poll, FP&A teams were more likely to have predictive capabilities. These estimates can also aid in planning capital expenditures and other investments.

4. Budgeting

FP&A’s more forward-thinking responsibilities include budget planning and estimating the company’s future financial performance. Budgeting involves sifting through financial statements to determine how to spend funds. Forecasting necessitates the development of financial models that take into consideration trends within the company and changes in the larger industry and economy that may affect sales and profit.

5. Ad-hoc reporting

These on-demand reports, which the CFO or controller often requests, frequently provide a more detailed look at a certain KPI or business department. To obtain the exact information required by the executive, an analyst or director may need to pick figures from different broader reports.

This reporting and modeling, especially if it is done frequently, give the FP&A team the information it needs to provide timely, accurate, and actionable recommendations to senior management.

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How Do I Know If FP&A Is Right For me?

A good financial analyst can handle and adequately analyze a mountain of different types of data and data assessment metrics. They are adept at problem-solving and can identify the different puzzle parts that comprise a company’s finances and envisage putting the puzzle pieces together to construct many prospective development scenarios.

If you’re a creative problem solver with a natural or nurtured flair for arithmetic, modeling, and forecasting, pursuing a professional career path in financial planning and analysis might be a good fit for you.

How Much Does A Financial Planning and Analysis Manager Earn?

People who excel at assessing corporate finances and effectively determining what financial movements a firm should make to be most successful in an evolving marketplace are well compensated.

Junior analysts earn around $50,000 per year as entry-level employees. Senior analysts can earn up to $100k per year, with 10-15% bonus potential.

Financial planning and analysis manager and a significant multinational company’s Chief Financial Officer typically earn between six and seven figures in salary, plus large performance bonuses.

Generally, pay varies a lot based on the industry and the company. Larger companies with higher profits can afford to pay more than a smaller company with a net profit that is unlikely to exceed seven figures.

Also, bonuses are based on the company’s earnings and/or the analyst’s ability to make accurate financial forecasts.

What Are The Skills Needed As A Financial Planning And Analysis Manager?

An FP&A analyst expert needs to excel at math and have an appetite for crunching numbers. It’s, therefore, no surprise that many people in this role are former accountants.

Below are some skills required for financial planning and analysis professionals to have.

1. Business and Partnering Skills

Since FP&A team members need to communicate and collaborate with colleagues from across the organization, they should have strong business partnering skills. Business partnering skills include:

  • Working well with others and understanding their business priorities and goals.
  • Building a deep knowledge of the company and its processes.
  • Turning droves of information into easily understood reports. 

2. Decision Making and Learning Skills

Although financial analysts must assess various complex financial options and scenarios, they must also be capable of making solid conclusions, avoiding being paralyzed by a broad array of financial options.

Financial analysts must have a strong drive to learn new things regularly. Analysts must change and adapt in the same way that organizations, markets, and economies do.

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3. Project Management Skills

Financial analysts build financial projects by putting together reports such as three-year and five-year financial estimates. Good financial analysts frequently bring project management talents to the table, such as leadership, cost and time management, delegation, communication, and overall problem-solving abilities.

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4. Reading and Analyzing Financial Statements

Corporate financial planning and analysis professionals have to be able to read and truly understand a company’s financial statements, balance sheets, cash flow statements, income statements, and in the case of public companies, shareholders’ equity statements.

Frequently Asked Questions On Financial Planning And Analysis

What skills do you need to succeed in an FP&A career?

Because FP&A professionals have a direct impact on a company’s cash flow and operation, they need to have the right skill set and personal characteristics to constantly strive for success. 

Some of the characteristics financial planning and analyst should have are as follows:

  • Dedication
  • Strategic thinking
  • Personable
  • Detail-oriented
  • Analytics skill
  • Presentation skill
  • Soft skill

What Is The Difference Between Budgeting and Forecasting?

Budgeting is a method businesses use to make precise projects of revenues and expenditure for a future or specific period while taking into account various internal and external factors prevailing at that time.

Forecasting is an estimate of what may happen during that time. Forecasting is more like prediction based on real data, historical inputs using statistics.

What does a fnancial planning and analyst do?

Financial planning and analysts (FP&A) performs a set of four activities that support an organization’s financial health: 

  1. Planning and budgeting
  2. Integrated financial planning
  3. Management and performance reporting
  4. Forecasting and modeling


There are a lot of benefits you get as a professional financial planner and analyst and it ranges from quality compensation, growth opportunities, impact, and job stability. 

Since every firm needs proper financial planning and analysis to excel, FP&A remains one of the highest-paid careers in the finance niche. If you’re a problem solver who is passionate about crunching numbers, carrying out research and analysis then a career path as a financial planner and analyst might be a good fit for you.

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