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.
Forecasting new product launches are a tricky business with plenty of emotional baggage. They are also often, inevitably, wrong. This blog argues that when commercial finance or FP&A professionals are involved they should focus equally on model flexibly as well as the outcome.
The course of managerial accounting dedicates up to two chapters on the subject of budgeting. 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 production function.
A British retailer recently announced plans to close over a hundred stores. Could part of the problem be an FP&A group whose ideas are outdated? The responsibility of FP&A extends far beyond forecasting and reporting financial numbers, to providing advice and insights into managing, nurturing, protecting and growing intangible assets such as customer and brand loyalty, as though they were tangible assets.