Today’s FP&A practitioners are highly trained professionals with a greater ability to see the big picture, analyse and interpret data, and build predictive models. They are also experts in harnessing the power of information technology. They are able to create detailed cost and revenue databases that unlock patterns and trends in business behaviour and to build sophisticated and responsive forecasting models. We do rolling forecasts because we know they are better and because we can.

When I first came across the term driver based planning and forecasting I was confused. As an ex-investment banker having joined a Finance team the concept of drivers when talking about a forecast or plan was simply assumptions. Why was it not called just that? Assumptions! Investment bankers have been building models with assumptions ever since the first model was built and a corporate transaction was negotiated.

The purpose of your company’s administrative function is to support what your company sells. Support consists of departments like finance, human resources, and information technology; future articles will describe these departments in greater detail. The focus of this article is on administration as a whole. 

The strength of those working in FP&A often comes when they worked in different industries or with BU’s from different countries. They learned a little bit more about the impact management can have on the numbers under different circumstances. To develop a long-range forecast, financials need to look beyond current events and steer away from business plans based on extrapolation.

The course of managerial accounting dedicates up to two chapters on the subject of budgeting. Going into these types of budgets may be helpful for students but I don’t want this article to be a repeat of what appears in textbooks.  I want this article to focus on the process of financial planning and how it can be used in your company’s selling function.

Traditional budgeting process normally starts with forecasting sales levels, cost of goods sold then all operation expenses until reaching to the proforma income statement without understanding how changes in costs (both variable and fixed) & sales will affect profits in future periods. But modern FP&A professionals started to implement CVP analysis during the annual profit plan to study the interaction of sales with variable & fixed costs on the profits received.