FP&A was traditionally focused on compiling data, crunching numbers, and creating reports and analysis for management and department leaders. More and more companies are moving away from this approach. Simply compiling and analyzing numbers isn’t enough.
With the amount of data growing all the time and an unprecedented fast paced business environment, FP&A has merged into a strategic asset of every aspect of the company. When working correctly and with all of the tools available, the finance team fuels growth, increases revenue, and helps everyone make better business decisions.
Despite the fact that many companies are adding on new software tools to help fuel this transition, an FP&A Trends report shows that finance teams are spending only 16% of their time adding value, with the remaining 84% of the time spent on “old habits” such as gathering data, information, and insight generation.
Much of this can be changed through business partnering.
What is Business Partnering in FP&A?
Business partnering is a relatively new term which describes not only the physical differences of FP&A taking on new roles, but also the paradigm and thinking shift in the strategic journey of the finance team. It seems that the term business partnering was first coined in the 1st edition of the PwC book titled CFO: Architect of the Corporation’s Future.
The always forward thinking PwC described this movement around the time of the huge increase in data, software systems, and right before the takeoff of tech companies. They highlighted the need for a vision change in the FP&A department.
Shifting away from reporting and transaction processing, and moving towards strategic decision making that supports all business units was critical in their minds to keep up with the changing business environment.
Although the term has evolved somewhat since then, the idea remains the same: FP&A needs to play a more active part in decision making.
The role of an FP&A business partner
There is no one description or one approach of what an FP&A business partner should be. It varies greatly depending on the size of the company and finance team, experience of everyone involved, business stage of the company, and how flexible management is. However there are some characteristics that are important for every FP&A specialist.
The first step is trust and reliance. Although this isn’t something new or surprising, if the company is able to rely on the finance teams’ consistent and error free financial reports then this is the first step in business partnering. Trust goes a long way and is the foundation of it all.
In addition, the FP&A Trends report found 3 things that are unique to FP&A business partnering. These are more challenging and can be hard to come by.
- Business Oriented – Part of the mindset change is understanding how the data affects each business department. FP&A specialists need to understand the problems of their Business Partners and strive to solve them. Doing this without being told, understanding managements’ business language, and taking an active role in the team are all key. These aspects will quickly develop a higher level of trust and confidence.
- Analysis and Insights – FP&A teams are made up of curious thinkers, problem solvers, and experienced employees. They are hired not just to make reports but also to create the news by pulling out key trends and ultimately influencing key decisions that the business is making. The best solution for this is digitization which provides in-depth dashboards for reporting trends, and automates the manual parts of the finance department.
- Decision Support – FP&A has a deep understanding of cause and effects and business longevity. Building a broad base of different scenarios to guide the business through both good and tough times will help find the optimal outcome that creates maximum value.
Business Partnering in action
As the name suggests, business partnering involves two sides in order to work. In this case, the executives (CEOs, CFOs, management, etc.) and the finance team.
For finance team members and FP&A specialists:
- Gain a deeper understanding of the business- this includes customers, stakeholders, and key drivers.
- Show leadership and take initiative- With business partnering, there’s nothing management would rather see than the finance team showing leadership.
- Develop credibility- Show that you are willing to go above and beyond being a finance expert by being a business minded partner in the organization with a goal of driving value.
For CFOs and other management roles, the process is similar, but with a broader view:
- CFOs should align FP&A with the organization’s strategy. While everyone on the FP&A team can be involved, it’s the CFO who leads this with the rest of leadership.
- Discovering new opportunities for the FP&A team to act on. This can be internal team growth or even on the organizational level.
- Implementing new tools to improve collaboration and performance. This can be something as simple as communication tools for hybrid or work from home companies, all the way up to FP&A software tools that help the team automate data and analyze it better and easier.
FP&A business partnering requires an organizational mindset change as well as increased collaboration between management and the finance team. Companies who are able to do it successfully will be rewarded with increased productivity thanks to transparency and deeper understanding of the organization. These FP&A teams will be able to increase productivity across all departments.