Imagine your business with an FP&A Manager
23rd February 2018
Financial Planning and Analysis. Sounds important, doesn’t it? Most businesses carry out some of the functions of an FP&A Manager, but the tasks are split across the finance team, probably with input from the CEO, potentially the rest of the C-Suite… Is that the best way to treat such a vital cog in your business? This article takes a look at the dedicated FP&A manager, the kind of work they do and why you might want to hire one
An FP&A Manager needs to straddle a divide. On the one side, they have a very specific and highly technical set of responsibilities. Systems, processes, cash flow analysis and forecasting, working with big data… Real juicy finance stuff. We love all that, but not everybody gets it. The flip side to the FP&A job – and what really sets the role apart – is communicating these technical challenges and predictions to the rest of your team. They must be able to explain financial details clearly and concisely, often in lay terms, what’s needed from each department, team and member of staff.
The Technical Stuff
A Financial Planning & Analysis Manager should, well, manage your financial planning and analysis. What does that actually entail?
· Cash flow analysis and forecasting
· Analysis of internal controls
· Implementation of new systems and processes
· Sales data analysis
· Long term financial forecasting
Here are just a few improvements an FP&A Manager might make to your business:
Setting a proper budget and tracking cash flow is key to identifying and mitigating any liquidity issues that may appear on the horizon. Communicating this to everyone at your business and getting their buy-in could make a real difference to your bottom line.
Profit and Loss Analysis
Forecasting ROI (return on investment) with a close analysis of the gross and operating profit margins is another key function of the FP&A. A good FP&A Manager will keep track of supplier costs, tax changes, import duties and any other possible fluctuations to keep this analysis accurate.
Return on Capital Employed = Earnings Before Interest and Tax / Capital Employed. ROCE measures a company’s profitability and the efficiency with which its capital is employed. This information is invaluable both internally (if you know where you stand on this, you can identify areas to improve upon) and externally too, if you’re dealing with investors for example.
Times are changing. Advances in cloud computing and FP&A software means that the role is more mobile and reactive than ever before. This means that now you can use FP&A as direct support for your lines of business. This keeps communication flowing, reduces friction (and lag time!) and helps to incorporate financial planning into the work of your other departments.
This added processing-power has other positive impacts for the FP&A too. Imagine being able to switch to rolling forecasts, using a consistent forecast horizon. This would allow you to focus on consistent, cumulative improvements rather than chasing year-end numbers, made at the expense of future operations. Real businesses don’t stop at fiscal year-end… and neither does your FP&A hire!
As the FP&A Manager is now able to work with incoming data and adapt to changes in real time, this gives them the ability to impact on another vital area of your business: sales and marketing:
“We can track individual customer buying patterns and send them targeted email coupons to maintain their buying frequency. We can use delivery data to better understand their neighbourhood, family size and what type of offers yield the best response from them. The FP&A team could overlay weather data to see how weather conditions impact buying behaviour. We could test hundreds of other options with the intention of converting the insights gained into higher revenues or more efficient operations”
Having a dedicated team member keeping an eye on your financial data has multiple positive side-effects. As Techtarget outline above, having insight into customer buying patterns, frequency and behaviours can help to pinpoint exactly what works and what doesn’t. Identifying these opportunities early and communicating them clearly with your sales and marketing team is something that any business could benefit from enormously.
The FP&A Manager is the bridge between the nitty-gritty of finance and the daily operations of a business. Taking stock of all changes, keeping everyone up to date and on-task. Plus, they’re a real boon when it comes to talking money with investors, banks and so on.
So, a numbers-oriented job with a big focus on communication. You’ll need to find the perfect balance of technical savvy and business-mindedness. A person that can come in, own the position and make a positive impact from the get-go…
Why not give us a call and see how we can help. We’ve placed precisely the kind of person you need, at businesses similar to yours. Let us do what we’re good at, so an FP&A Manager can leave you to do what you’re good at.