What Is FP&A Business Partnering?

By Anders Liu-Lindberg, Head of Global Finance PMO at Maersk Transport & Logistics 

partneringAs finance functions around the world have been transformed to run very efficiently by utilizing Global Shared Service Centers in low-cost locations, companies are starting to demand more effectiveness from the finance function. 

Essentially, Finance is now doing things right but not necessarily doing the right things or rather enough right things. Finance is tasked with delivering better Business Intelligence and more importantly better insights to influence decision-making in the right direction and creating an impact on company performance. At the center of this shifting demand is the FP&A function which needs to deliver better analytics but also needs to partner with business stakeholders. While always an analysis function it’s much more challenging to develop meaningful relationships with stakeholders as it requires completely different skills vs. the traditional role of FP&A. To help facilitate this change we will take a closer look at the term “Business Partnering” and explore what it means for the FP&A function.

“Business” and “Partnering”

Let’s then disseminate the two key terms and discuss what they really mean.

Business: Seems obvious that this is about the company you work for and the industry it competes in. Too often though FP&A professionals have been occupied with purely looking at the numbers rather than connecting them to a business context. A trend is a trend regardless if you sell flat screens or ice creams? However, these are two completely different markets and the production, supply chain, marketing etc. all function in different ways. Hence, to build a relationship of trust with your stakeholder irrespective of what function they work in you need to understand what they do. We will explore tips and tricks to learn about the business in a later blog post.

Partnering: To partner with someone you need trust. Without trust, there’s no partnership. That holds true in business as it does in your private life. To establish trust with any given stakeholder you can analyze what elements of the trust equation you need to work on. The elements are Credibility, Reliability, Intimacy less Self-Orientation. Often FP&A professionals find it hard to build intimacy with others yet it’s important to remember that being intimate with someone doesn’t mean being private with them. Rather you can connect on a personal level talking about some experiences you’ve had together or a common interest. Most importantly, you need to know the profile of your stakeholder. Some like small talk whereas others just want you to deliver your recommendation in 30 seconds or less. Once you have figured out how to build a relationship with your main stakeholders all you need to do is to increase your interactions with them be it in a formal meeting or at the coffee machine. We will also explore the tools for how to build partnerships in a later blog post.

It's difficult to be a good business partner if you fall short in either of the two categories and there are no shortcuts really to becoming good at it. It takes hours and hours of work and practice but you got to start somewhere.

Business Partnering in the context of FP&A

FP&A is often a corporate function that delivers analyses to senior management hence tend to work more at a strategic level rather than at the operational or tactical level. That means you need to understand the strategy of your company and challenge strategic decisions. You also need to partner with both senior leaders as well as frontline functions that deliver critical inputs to your planning and analysis. Senior leaders are short on time and leave very little room for errors. Hence, FP&A Business Partnering differs from Finance Business Partnering on the level of the stakeholders to deal with as well as operating at the strategic level. In a later blog, we will look at how the FP&A function use business partnering to improve company performance at the strategic level.

To understand the challenging part about being successful with business partnering in the FP&A function then try and remember the last time you showed up with wrong numbers in your management presentation or made a forecasting error that led to a wrong a decision. We’ve all tried it but never really thought about how much it damaged your partnership with the management team. Had you only had the business understanding to know that your numbers clearly didn’t fit with what happened in the business during the last month or that your forecast clearly wasn’t realistic. Now that you know you can get started on building trustful relationships and help your company improve business performance.

In conclusion, what’s important to know about Business Partnering is that you need to find ways of increasing your business understanding in addition to building relationships with your key stakeholders through establishing trust. By doing this you will be able to leverage your FP&A skills and your FP&A team in a completely different way which will boost value creation in your company.

The article was first published in prevero Blog


Improving Financial Reporting through Financial Planning

By Karl Kern, Founder/President, Kern Analytics LLC

FP&A Tags: 

​Financial reportingFinancial Planning helps Financial Reporting

Financial reporting is the process of describing how businesses earn revenues, incur expenses, and generate cash flows.   An objective of financial reporting is to develop insights into profitability, liquidity, and solvency.  One way to improve the ability in achieving this objective is through financial planning.

Financial planning can help financial reporting develop insights into profitability, liquidity, and solvency through a chart of accounts.  A chart of accounts is a list of names used to record and communicate transactions.  Transactions can be recorded and communicated broadly through assets, liabilities, equity, revenues, and expenses.  Transactions can be recorded and communicated narrowly through cash, accounts payable, common stock, merchandise revenue, and cost of goods sold.  Recording and communicating transactions broadly are processes dictated by organizations like the Financial Accounting Standards Board (FASB), International Accounting Standards Board (IASB), and Securities and Exchange Commission (SEC).  Recording and communicating transactions narrowly are processes influenced by the actions of people within businesses.  

Financial Planning guides actions 

The actions of people within businesses can be guided by the role of financial planning.

Financial planning can guide actions within businesses based on how revenues will be earned.  Financial planning can guide people to think about the types of products that will be delivered.  Financial planning can guide people to think about the types of services that will be provided.  Thinking about the types of products delivered and services provided can create flexibility within a chart of accounts.  A chart of accounts can be organized to communicate revenues broadly, e.g. product revenue and service revenue.  A chart of accounts can be organized to communicate revenues narrowly, e.g. food sales and tax services.  Creating flexibility within revenues can help people assess strengths and weaknesses within customer relationships.

Financial planning can guide actions within businesses based on how expenses will be incurred.  Financial planning can guide people to think about how products will be created, e.g. direct materials, direct labor, and manufacturing overhead.  Financial planning can guide people to think about how products or services will be promoted, e.g. public relations, social media, and trade shows.  Financial planning can guide people to think about how businesses will be supported, e.g. compliance, communication, and training.  A chart of accounts can be organized to communicate these thoughts broadly through production, selling, and administration.  A chart of accounts can be organized to communicate these thoughts narrowly through specific initiatives.  Creating flexibility within expenses can help people assess strengths and weaknesses within internal processes.

Financial reporting helps people inside and outside businesses to assess financial health.  The foundation in this effort is a chart of accounts.  The effectiveness of a chart of accounts can be achieved by the role of financial planning.

Will You Be a Relevant FP&A Professional 5-10 Years from Now?

By Mark Gandy, Outsourced CFO, Principal at G3CFO

Edward Hess in his excellent book Learn or Die reminds us that today’s average tenure on the S&P 500 is 18 years and declining. In 1980, the average tenure was 30. 

Hess also states through his research that nearly half of the S&P was replaced in the past decade.

How’s that for company relevance?

Then he tells us the average tenure of the Fortune 500 CEO is just 4.6 years.

As an FP&A professional, you might be asking, “What does this have to do with me?” I believe the answer is everything.

Could it be possible that the role of the FP&A professional is just as much at risk as the large companies cited above or the CEOs of these same organizations? Shouldn’t we be asking, “How relevant is my role in the years to come?” Fair question?

Let’s unpack this FP&A relevancy question with a few others that might help.

Clayton Christenson on The Job to Be Done

Author and business consultant, Clayton Christenson teaches business owners that the key to selling more products or services is to know the specific job these goods perform for the customer. In this insightful video, Christenson explains that the job of the milkshake is to keep the driver occupied during a long drive to work while satiating hunger pains throughout the morning. Brilliant.

Let’s apply Christenson’s concept to FP&A. What job is being performed for every FP&A activity you perform? What’s the job of the historical marketing and sales analysis? What job is the driver-based rolling forecast being done for the users of this output? 

I’m sure you can add to this list of questions. Accordingly, I believe Christenson’s simple job-to-be-done framework aptly applies to the FP&A relevancy question.

The better you can answer Christenson’s questions in all aspects of your work, the more relevant you are likely to be over the next 5 to 10 years.

Two More Questions to Throw at the Relevancy Question

I have a theory. I provide CFO consulting services for small, growing companies in the U.S. My gut instincts tell me FP&A relevancy is not at risk, far from it. For me? That’s a different story.

Here’s how I personally attack the relevancy question. I do so with two other questions:

  1. How am I helping my clients to stay relevant in the long term?
  2. Additionally, how am I staying relevant myself?

I think I know the answer. I’m not even sure IBM’s Watson has the self-awareness to address this. My answer is that I stay relevant by keeping my clients relevant for a long, long time.

Similarly, I perceive that you, the FP&A professional, stay relevant by keeping your employer relevant. Now work backwards which comes instinctively natural for you—how will you do that?

As a homework assignment, I’d enjoy reading your feedback in our LinkedIn Group about how you are staying relevant by keeping the organization you serve relevant. It’s not about you. It’s about making the business you serve great. You have some of the greatest intellectual capital in the world—the creativity and capability that exists in your mind. Use it and you remain relevant. 

FP&A and the three-headed serpent

How far can you go with improving your FP&A practices? Recently, I have encountered a paper conveyed by Prophix: Defining the Evoluion of FP&A: Benchmarks, Challenges and Opportunities.

In this paper the authors are trying to find the key points that define FP&A evolution, based on a survey conducted among 300 FP&A leaders. The results of the survey  are presented in the form of insights, of which they have 7.

I will try not to give too much away, but for me, the most striking insight was the following: ‘FP&A Leaders want better data, better technology, more accountability” (Insight 7).

While reading about this insight, an analogy of a mythological three-headed serpent came to my mind. I recalled my childhood and the tales I have read about such creatures. The biggest problem this serpent had, was: which of the heads was the master?

model FP&A

In our book ‘Make Data Work for You’ (which you can download for FREE here), we have presented the model of: ‘data – business planning – tools & techniques’, which seems to have a straightforward connection, and relevance to Prophix’s Insight 7. This model is also a similar legendary creature with three powerful heads and the same eternal dispute: which of the three is most important?

First of all, let’s have to look at each ‘head’ separately.


The Prophix survey states that ‘Companies face a shortage of the right data’ (Insight 4). My first question is: what is the ‘right’ data? You get data from almost every department of your company, as well as from the outside world. The key to ‘right’ data is ensuring that the data you process and exchange fits the predefined purpose. In order for this to work, you and your colleagues and partners need to ‘speak the same language’. You need to be very meticulous formulating correctly which data you need and knowing which data you must get. 

The next issue is the quality of the data. If you use ‘bad’ data for your analysis, it will directly influence the quality of your results. As they say: ‘Garbage in, garbage out’.  How to get correct data that fits the purpose, at the right place, at the right time? You need to initiate the process of managing data according to the needs and feasible resources of your company. This can all be achieved with a well-implemented data management function.

Business Planning

Now assume you have right data at the right place. Is your FP&A function mature enough to process the data effectively? Accordin to the Prophix survey: ‘Companies invest time on the wrong FP&A activities’ (Insight 3), ‘FP&A teams aspire to be more strategic (Insight 2), ‘Companies are immature relative to FP&A analytics’ (Insight 1).  In order to become more mature and strategic, you need to know which of your business stakeholders have which needs and information requirements. You need deliver information that fits the decision makers’ purposes. And the delivery of this information needs to be as effective as possible. So, business partnering and optimization of your own processes, together with business planning methodologies call to action. You need to move from data processing to data and information analysis. You need to move from looking back to looking forward in your analysis. By providing correct advice to decision makes you gain the position of a strategic partner.

Tools & Techniques

The efficiency and effectiveness of  business planning processes and advanced techniques often require the support of modern technology. Quoting the Prophix survey again: ‘FP&A success is inhibited by technological immaturity’ (Insight 5).  Here is the time to assess which technology meet your real business requirements and fit your company capabilities.  From my experience, very often after implementation of software applications, only 20 % of the functionalities are used. Why? Perhaps due to limited knowledge, absence of trained staff, and thus not knowing, or not having the means to use the software to its full potential. Manual work-arounds are built as substitution for these limitations. The real key to solving this issues is matching your technological ambitions with your real needs and capabilities.

Now let’s get back to our FP&A serpent. I believe its three heads are three masters that cannot be separated from each other. Each head plays own important role in FP&A development. They do need to be working together to a set purpose, and correspond to the company’s resources and ambitions. Only then they can conquer the world.

The next, and more important question is: in which order should you start improving the 3 key elements in order to work on your own FP&A (r)evolution?

The FP&A Evolution: A Reality Check

The FP&A function has certainly evolved from a tactical to a more strategic function over the past five years. A perception that has become relatively common is that most FP&A teams have the resources and support they need to deliver meaningful strategic value. I partnered with FP&A thought leaders Larysa Melnychuk, and James Myers to develop the FP&A Empowerment: The Evolution of Technology & Trends survey in part to find out if this perception is a reality. Are FP&A teams empowered to deliver strategic value across the enterprise?

The results of the FP&A Empowerment: The Evolution of Technology & Trends survey indicate levels of data, analytical, and technological immaturity that make me lean towards classifying this perception as a myth. The survey results were so surprising that I used polling questions in two FP&A focused webinars in Q4 of 2018 to support for the results or to offer caution in making inferences based on the survey results.

In terms of data maturity, the struggles of the FP&A Empowerment: The Evolution of Technology & Trends survey respondents are depicted in the chart on the left side of Figure 1 below. Eighty-eight percent (88%) of companies struggle with data availability and quality as only twelve percent (12%) of respondents have access to the right data in a timely manner.  The data maturity of companies attending FP&A focused thought leadership webinars in Q4 of 2017 is not any better. Only 11% of the 183 of webinar attendees answering a polling question relative to the data maturity at their companies reported that decision makers have access to the right data at the right time, data nirvana. The webinar company sample has even more prevalence of data overload at 21% versus 10% for the FP&A empowerment company sample. The data from the webinar polling questions does not contradict the general level of data immaturity at companies evident in the results of the FP&A Empowerment: The Evolution of Technology & Trends survey.

Data Maturity

A survey question designed to help assess the technological maturity of companies taking the FP&A Empowerment: The Evolution of Technology & Trends survey was: How modern are your company's reporting and analytics tools? The surprising preponderance of technological immaturity at the companies of survey respondents is depicted in the chart on the left side of Figure 2 below. Forty percent (40%) of companies are leveraging only a basic (22%) or very basic solution (18%). Companies answering the same question posed as a webinar polling question also have a prevalence of technological immaturity (depicted in the chart on the right side of Figure 2 below). Forty percent (47%) of companies are leveraging only a basic (24%) or very basic solution (23%).

Technological Maturity
In assessing the level of analytical maturity of companies responding to FP&A Empowerment: The Evolution of Technology & Trends survey and FP&A webinar polling questions we leveraged the FP&A Analytics Maturity Model developed by the International FP&A Board depicted in Figure 3 below.

FP&A Board Analytics Maturity Model
The surprising degree of analytical immaturity at companies represented in the results of FP&A Empowerment: The Evolution of Technology & Trends survey is depicted in the chart on the left side of Figure 4 below. Fifty-five percent (55%) of companies reported being in a developing state, basic (13% or developing (42%). Furthermore, only 17% of companies reported being in a leading state of analytical maturity, advanced (14%) or leading (3%). The general level of analytical maturity of companies attending FP&A focused thought leadership webinars in Q4 of 2017 (depicted in the chart on the right side of Figure 4.) is not any more encouraging than that of survey respondents. Sixty-three percent (63%) of companies reported being in a developing state, basic (15%) or developing (48%).

Analytical Maturity
Most FP&A teams are empowered to deliver strategic value across the enterprise, perception or reality? Unfortunately, based on data obtained from over 500 companies across the globe, it appears to be much more perception than reality. Data immaturity, technological immaturity, and/or analytical immaturity are inherent barriers for companies in realizing the potential that the FP&A function has to offer in empowering data-driven decision making that improves performance across the enterprise.

If you want to learn more: