I have experienced the great divide between Finance and Operations. They live in separate worlds. They speak different languages. They often misunderstand each other or, worse, fail to see how interconnected their roles truly are. When this happens, the business suffers.

In this article, we will explore the concept of Integrated Financial Planning, the key components of Integrated FP&A and practical steps to build an effective framework. 

Integrated FP&A

Having been on both sides, in my view, Finance and Operations share more in common than they realise — especially when it comes to planning. Two critical functions — Sales and Operations Planning (S&OP) and Financial Planning and Analysis (FP&A) — are frequently perceived as separate entities, each with distinct objectives and metrics.

As I wrote in my article, S&OP focuses on balancing demand and supply, using physical units and operational metrics, while FP&A centres on financial planning, employing monetary units and financial metrics. Despite these differences, both functions have a common goal: providing forward-looking insights to guide strategic decision-making.

However, when S&OP and FP&A operate in their silos, organisations often struggle with redundant processes, misaligned strategies and missed opportunities. Integrated FP&A offers a way to bridge this gap, aligning financial, operational, commercial and strategic plans into a cohesive and dynamic process. There is one game plan.

From the supply chain perspective, this holistic approach is often called Integrated Business Planning (IBP), which extends beyond the traditional S&OP. Regardless of the terminology used, the objective remains the same: to align all functions to drive better decision-making for the company.

The Key Components of Integrated FP&A

Integrated FP&A builds with these interconnected processes that align strategy, commercial, operations, supply chain and finance. By integrating these key moving pieces, organisations can create a forward-looking planning framework that enhances decision-making and financial performance, tearing down the walls of functional silos.

1. Strategic Planning

Strategic planning sets the organisation's vision, defining long-term financial objectives and growth targets. It ensures that the business doesn’t set financial goals in isolation but is directly aligned with business strategy. This process includes capital investment planning, market expansion strategies and profitability targets that guide decision-making across all functions.

2. Commercial Planning

Commercial planning is the foundation of business growth, setting the direction for market engagement, customer acquisition and revenue generation. This process involves:

• Market Strategy Development – Identifying target markets, customer segments and competitive positioning.
• Product and Pricing Strategy – Determining which products to sell, at what price points, and through which channels.
• Sales Target Setting – Defining short-term and long-term sales goals aligned with financial and operational capabilities.
• Promotional and Trade Spend Planning – Allocating marketing budgets, trade discounts and promotional campaigns to drive demand.

While commercial teams focus on revenue and market expansion, their plans must align with supply and financial capabilities to ensure feasibility and profitability.

3. Demand Planning

Demand planning bridges commercial ambitions with an independent forecast, predicting future customer demand as accurately as possible. This process includes:

• Statistical Forecasting or Machine Learning Models – Using historical data, seasonality patterns and trend analysis to generate baseline demand forecasts.
• Market Intelligence & External Factors – Incorporating competitive actions, economic indicators and customer feedback into demand projections.
• Collaboration with Sales & Marketing – Aligning demand forecasts with planned promotions, product launches and market expansion efforts.
• Scenario Analysis & Assumptions Testing – Evaluating demand scenarios to prepare for fluctuations and uncertainties.

A strong demand planning process prevents stockouts, minimises excess inventory and ensures that financial forecasts reflect realistic market conditions. It serves as the critical input for supply and financial planning.

4. Operational Planning (S&OP/ IBP)

Sales and Operations Planning (S&OP) and its extended form, Integrated Business Planning (IBP), ensure that demand, supply and production capacity are balanced to support business goals. These processes integrate operational plans with financial outcomes, bridging the gap between what is physically possible and what makes financial sense. It is critical to understand the impact of operations on the financials.

5. Financial Planning (FP&A & xP&A)

Financial Planning & Analysis (FP&A) provides the framework for budgeting, forecasting and financial scenario modelling, ensuring that revenue and cost expectations align with operational realities.

The extended version, known as Extended Planning & Analysis (xP&A), goes further by integrating financial planning with supply chain, commercial and HR, creating a comprehensive view of business performance. By linking financial projections to actual business drivers, such as demand trends, production constraints and commercial strategy, companies can create more accurate and actionable financial plans.

6. Scenario Planning & Risk Management

Markets are unpredictable. We have seen this time and time again. We have learned hard lessons since Covid. Naturally, Integrated FP&A must account for this uncertainty.

Scenario planning and risk management enable businesses to prepare for potential disruptions, including supply chain constraints, economic downturns and demand fluctuations. By modelling different scenarios and assessing their financial impact, organisations can be better prepared with contingency plans that enhance resilience, improve decision-making speed and mitigate risks before they become critical issues.

Together, these components form the backbone of Integrated FP&A, ensuring that organisations align strategy, commercial, operations, supply chain and finance to drive sustainable growth and profitability.

7. Key Metrics to Track

It is important to track financial metrics as well as operational metrics. Some key metrics to consider are as follows:

Metric #1 Forecast Bias

• Meaning: It assesses whether forecast errors consistently deviate in one direction
• Calculation: Sum of observed forecast errors over multiple periods / Total number of observed periods

Metric #2 OTIF (On Time In Full)

• Meaning: It shows how many orders are delivered on time in full
• Calculation: Number of On-Time In Full Deliveries X 100 / Total Number of Deliveries

Metric #3 Stockout Value

• Meaning: It measures the value of lost sales by lack of product
• Calculation: Average Daily Sales Revenue X Number of Days that Product is Out of Stock

Metric #4 Inventory Turnover

• Meaning: It shows how fast or slow inventory is moving. The longer we keep inventory, the higher the chances of losses. The higher this metric, the better
• Calculation: Cost of Goods Sold X 100 / Average inventory. Where average inventory = (beginning inventory + ending inventory) / 2

Metric #5 Sales Growth Prior Month

• Meaning: It measures the percentage change from one month to the next
• Calculation: (Sales in Current Month – Sales in Prior Month)/ Sales in Prior Month
• Note: It’s also important to apply this calculation to the prior year
• Sales Growth Prior Year = (Sales in Current Month – Sales in Same Month Last Year) / Sales in Same Month Last Year

Metric #6 EBITDA Margin

• Meaning: It measures a company’s operational profitability as a percentage of its total revenue (sales)
• Calculation: (Earnings Before Interest, Taxes, Depreciation and Amortisation/ Sales) X 100
• An alternative metric is the EBIT (Earnings Before Interest and Taxes) margin.

Metric #7 ROCE – Return on Capital Employed

• Meaning: It shows how the company is using the capital employed.
• Calculation: (EBITDA / Long Term Debt + Equity) x 100

How to Build an Integrated FP&A Framework

Finance is in a fantastic position to lead this process. It has visibility into the entire organisation — commercial revenue targets, operational constraints and capital allocations, making it uniquely positioned to connect business strategy with execution. With its analytical capabilities, finance can align competing priorities, drive accountability and ensure that planning is realistic and profitable.

Below is a step-by-step guide to developing an effective Integrated FP&A framework:

1. Break the Silos to Encourage Cross-Functional Collaboration

Traditionally, Commercial, Operations and Finance operate in separate planning cycles, leading to disconnects between revenue goals, supply constraints and financial targets. To achieve true integration:

• Establish cross-functional teams with Sales, Marketing, Supply Chain and Finance representatives.
• Define common goals and Key Performance Indicators (KPIs) that align financial, operational and commercial priorities. Companies use a balanced scorecard to reflect the different perspectives and avoid competing metrics.
• Develop a shared planning calendar so all functions work with synchronised timelines. This calendar should be kept sacred.

2. Build a Single Version of the Truth: Unified Data & Technology

Disparate data sources across departments can create conflicting plans. A unified data infrastructure ensures consistency and accuracy.

• Centralise data sources (when possible) for demand forecasts, supply plans, cost models and financial projections.
• Leverage cloud-based planning tools that integrate Sales & Operations Planning (S&OP), FP&A and commercial planning once the processes are stable.
• Establish data governance standards to maintain accuracy, version control and accessibility for all stakeholders.

3. Use Driver-Based Planning: Connect Operational and Financial Realities

A driver-based planning approach ensures that plans reflect real business dynamics in addition to the budget or annual operating plan (AOP). This implies a significant shift.

• Identify key business drivers (e.g., demand trends, supply constraints, cost fluctuations and market conditions).
• Link demand and supply drivers to financial models to create realistic revenue and cost forecasts.
• Continuously update assumptions based on market changes and operational shifts.

For example, if a company expects a 20% increase in sales due to a new product launch, the Integrated FP&A framework should automatically adjust production plans, cash flow needs and profitability projections.

4. Enable Rolling Forecasts

They don’t replace the budget. We want both. Rolling Forecasts are the best proxy to reality and ensure businesses can adapt quickly. These Rolling Forecasts extend from 12 to 18 months. They help provide visibility to supply planning and be more prepared.

5. Leverage Technology & AI

Modern Integrated FP&A relies on digital tools to streamline processes, improve accuracy and support scenario modelling. In my experience, the use of AI and Machine Learning for forecasting has shown positive results.

These ML models now ingest vast operational and financial data volumes to generate more accurate, dynamic forecasts. These models detect patterns, anomalies and seasonality far beyond what traditional tools can manage. The early detection of demand shifts allows supply chain and finance teams to adjust production schedules and working capital plans proactively.

Automation also reduces the manual workload in data collection and validation, allowing finance professionals to focus on value-added tasks like scenario planning and decision support. Even companies in the early stages of integration are seeing benefits by automating data pipelines and embedding AI into Rolling Forecasts.

In my experience, teams use ML to generate forecasts as well as for scenario planning. Companies can build Power BI dashboards to visualise the outputs of these ML models.

6. Establish an Executive-Driven Process through a Monthly Meeting Cadence like in S&OP

To be successful, executive sponsorship is fundamental. Without it, Integrated FP&A would be just a fantasy. Below are the key points:

• Hold regular Integrated FP&A review meetings where Commercial, Operations and Finance leaders align on key decisions.
• Ensure finance plays a strategic role, not just a reporting function, by influencing demand and supply decisions.
• Integrate FP&A into the company’s culture, emphasising continuous alignment between strategy, execution and financial outcomes.

Unilever (1) is a great real-world example of Integrated FP&A. As a global consumer goods leader, Unilever recognised the need for faster, more agile planning across functions and regions. They implemented a connected planning platform that integrated finance with supply chain, marketing and sales, supported by advanced analytics and scenario modelling.

This transformation enabled Unilever to respond more quickly to market disruptions, optimise working capital and increase forecast accuracy across business units. Unilever’s approach illustrates how Integrated FP&A can drive resilience and strategic clarity in a complex, fast-moving environment.

Conclusion: The End of Silos with Integrated FP&A

For too long, Finance, Operations and Commercial have planned in isolation, creating inefficiencies, misaligned targets and missed opportunities. Integrated FP&A marks the end of these silos, replacing fragmented decision-making with a unified, dynamic planning process for the benefit of the business overall.

Finance no longer operates separately from the supply chain, and sales no longer set ambitious targets without considering operational feasibility. Instead, all functions work together, aligning forecasts, resources and financial goals into a single, connected plan.

The future of Integrated FP&A is being shaped by powerful innovations. Real-time financial modelling is becoming more accessible, enabling organisations to simulate impacts instantly as new data flows in. Digital twins of the business, virtual replicas that mirror real-world performance, are helping finance teams experiment with changes in a risk-free environment. Next-gen planning platforms are increasingly cloud-native, AI-augmented and user-friendly.

As businesses continue to face volatility and complexity, the ability to anticipate, adapt and act quickly will define the leaders in Integrated FP&A.

Reference:

1. “New York FP&A Board 2022: XP&A – Risks and Opportunities” by Ana Karpenko, Strategic Finance Project Manager at Hedge Fund, November 24, 2022 : https://fpa-trends.com/article/new-york-fpa-board-2022-xpa-risks-and-opportunities