Top 5 FP&A trends for 2024

Finance departments are continuing to drive strategic value for their businesses with dedicated software that automates and streamlines their FP&A processes.

FP&A is, by nature, a forward-looking process that enables organizations to prepare for the future, rather than over-analyze the past. Taking measure of how FP&A is rapidly evolving will, in turn, help these same organizations stay steps ahead of their competition into 2024 and beyond.

What is FP&A?

FP&A stands for financial planning & analysis, a core function of corporate finance teams. Financial planning & analysis can include processes such as budgeting, reporting, forecasting, planning, and analytics, which aim to drive business performance. The function of FP&A is to monitor the health of the company and make proactive decisions to meet organizational goals.

1. Business optimization: 2024’s buzzword

Though global economic volatility continues, many businesses have plans in place for navigating these macro challenges as a standard part of their operations. Heading into the beginning of 2023, cash was king; maintaining sufficient cash reserves and managing cash flow effectively was critical to financial stability and seizing growth opportunities.

Now, as high interest rates and inflation combine to slow economic growth, companies must shift their focus toward business optimization. This involves the strategic deployment of cost-effective measures, risk mitigation, and contingency planning to identify opportunities for enhancing efficiency and increasing profitability.

In this light, finance professionals are consistently asking, “How do we squeeze out the excess fat to maintain profit?” Innovative technology, like a Financial Performance Platform, that supports access to simultaneously model multiple scenarios, assumptions, and variables is essential for these leaders to dig in, draw insights, and make the right decisions for their business. 

2. M&A growth opportunities for the midmarket

During times of economic uncertainty, there are two strategies businesses often leverage to drive incremental growth:

• Business optimization
• Mergers and acquisitions (M&A)

If companies have access to cash reserves or capital funding, they can use these resources to acquire struggling or undervalued businesses. This strategy can be especially valuable for midsized organizations to expand their market share, diversify their offerings and/or enter into new markets.

Leveraging data analytics during the evaluation process is essential for CFOs to flex their M&A muscles. Having the ability to run predictive model combinations of the two companies to identify growth opportunities and/or cost synergies empowers finance leaders to build the strongest case for an M&A investment while also helping to avoid costly mistakes.

3. A strengthened relationship between CFOs and other C-level peers

The CEO/CFO partnership has traditionally been a strong one but expect to see closer collaboration in the year ahead between the CFO and other C-suite peers including the CISO, CMO and CHRO. Taking a collaborative role with leaders of other business-critical areas gives the CFO greater insight into what’s driving overall operational performance and where there’s room for improvement. For example, by collaborating with the CMO, the CFO can better understand marketing spend, conversion rates and yield to determine where new measures can be implemented for increased efficiency.

4. AI as a critical finance tool

Few technologies have passed through the hype cycle as quickly as generative AI. Many finance teams have recognized the benefits of AI to quickly sort and analyze large amounts of data and uncover valuable insights for more strategic decision making.

The next real opportunity for generative AI in 2024 will be for specialized use cases, where the AI model generates a response based on a specific request and performs complex quantitative analysis of sophisticated data connected to that use case. This is where we will see AI adoption surge and transform how finance work is done.

5. FP&A and consolidation continue to converge

The modern finance department is consistently seeking new, advanced, and intelligent methods for decision making. To ensure these teams are receiving the constant performance updates they require, time spent on the manual tasks needs to be refocused on strategic support and value creation.

In the coming year, there’s likely to be more replacement of complex internal systems and manual processes with a platform that unifies core finance processes including planning, financial consolidation and close, reporting, and analytics in a single, scalable solution. Adopting this unified approach will enable finance professionals to add precision, eliminate errors and inconsistencies, and collaborate across teams quickly and efficiently.

FP&A keeps moving forward in 2024 and beyond

Despite all the FP&A trends pointing towards more automation, precision, and functionality, many finance teams continue to rely on spreadsheets to carry out their financial planning and analysis processes.

Moving into 2024, FP&A processes are too critical to be left to technology that’s unreliable, can introduce errors into your data, and cannot accommodate processes with multiple users.

FP&A software is the ideal solution for organizations of all sizes, scopes and levels of complexity, enabling finance teams to tackle 2024 with greater speed, confidence, and agility.

2024 will be another banner year for this rapidly evolving technology and the time is right for businesses to take advantage.