What is FP&A software?

Finance teams have been tasked with driving strategic value for their businesses, but this can be difficult to achieve without a dedicated solution to automate and streamline processes.

In this article, we’ll explore a game-changer for businesses: FP&A software. Broadly speaking, FP&A software is a comprehensive solution designed to streamline your business performance monitoring and management. It's about planning initiatives, keeping a keen eye on progress, and making sense of results.

But what makes FP&A software stand out from other business intelligence tools? Why is it a must-have for finance teams? And how can it bring value to your company?

What is FP&A?

FP&A stands for financial planning & analysis, which is 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. FP&A is largely considered a forward-looking approach, so you can prepare your business for the future, rather than analyze the past. The function of FP&A is to monitor the health of the company and make proactive decisions to meet organizational goals.

What is FP&A software?

FP&A software is an umbrella term that describes the methodologies, metrics, processes, and systems used to monitor and manage business performance. FP&A software can help you plan initiatives, track progress, and analyze results.

Often, FP&A software consists of five types of applications, including:

• Budgeting, planning and forecasting
• Financial, statutory and management reporting
• Financial consolidation
• Profitability modeling and optimization
• Strategy management

However, it’s important to note that not all FP&A software vendors offer all five application types. When evaluating FP&A software vendors, you should make sure they can meet your short-term goals, but you should also consider your long-term use case, and how you can scale the solution as you grow.

FP&A software has several common attributes including:

• It’s a high-level solution used to manage a business
• It’s a collaborative tool (e.g., not a personal productivity tool like spreadsheets)
• It’s non-transactional (unlike an accounting system or Enterprise Resource Planning (ERP) software)
• It’s used to automate processes in the finance department
• It records and analyzes what has happened in the past but also allows you to look into the future
• Applications can interact with each other – for example, budgets, plans, and forecasts are used when reporting on results

There are several other software solutions that fall under the FP&A software umbrella, including Corporate Performance Management (CPM) and Financial Performance Management (FPM) software. The functionality is fundamentally the same, but the terminology has evolved over time to specify that the software supports finance in driving business performance.

What’s the difference between BI and FP&A software?

BI software gives many users access to data in an unstructured user interface, whereas FP&A software has fewer users, but significantly more calculation capabilities and a structured user interface.

BI software was developed to help companies cope with the increasing volume of internal data. This type of software usually involves charting and graphical representations, such as charts and tables. However, BI software has limited calculation capabilities – though data can be manipulated as part of the process of importing data into the system.

In contrast, FP&A software is used to automate financial processes, such as budgeting, reporting, and consolidation. This type of software gives users access to data with a structured user interface, with features like dashboards, scorecards, and graphical representations that can look very much like BI software.

In today’s market, there is a fair amount of overlap between BI and FP&A software. However, if you plan to automate and improve your finance processes, you should prioritize a structured user interface that simplifies complex financial data, offers clear visualization of key metrics, and provides intuitive tools for forecasting and scenario planning.

Why do I need FP&A software?

FP&A software empowers finance teams to build multi-user processes (e.g., budget approvals and report distribution) to benefit the wider organization, while also automating and streamlining finance processes such as budgeting, reporting, forecasting, and consolidation.

Because when it comes to handling multi-user processes and automation, traditional tools like spreadsheets, ERPs, or accounting systems often fall short. Here's why:

• Productivity issues: Your team spends too much time manually inputting, formatting, and validating data in spreadsheets. This time could be better spent analyzing and understanding your company’s performance.
• Maintenance issues: Finance is not equipped to develop, support, and maintain multi-user systems. Developing multi-user applications in spreadsheets can be inefficient and costly and exposes you to data security concerns when shared amongst users.
• Accuracy issues: Large spreadsheets are rarely error-free but it can be difficult to identify and solve issues in a spreadsheet.

What are the benefits of FP&A software?

Not only does it streamline your finance processes, but it also brings value to your company by saving time, minimizing errors, and enhancing your decision-making.

Save time

No one likes to waste time, right? With FP&A software, many of your routine tasks can be automated. This means you can reclaim precious hours from your schedule. Imagine simplifying tasks like updating budgets, gathering data, or managing compliance reports – it's all possible with automation!

Minimize errors

We all know human errors can creep in, especially when dealing with lots of data. One small mistake in a spreadsheet can cause big problems for your budget. But with automation, you can reduce these errors and boost efficiency. Every accurate data point gives you a clearer picture of your business health.

Enhance your decision-making

In today's fast-paced, unpredictable market, every decision carries some risk. But what if you could run multiple financial scenarios to uncover the best path forward? With FP&A software, you can. It empowers you to make smarter, more profitable decisions.

In the end, saving time is like saving money. A comprehensive view of your business, coupled with more time on your hands, allows you and your team to focus on what truly matters for your business.

The benefit of FP&A software is that it empowers you to make better business decisions with more accurate data and better analysis.

Conclusion: choose the best FP&A software

Many finance teams rely on spreadsheets to carry out their financial planning and analysis processes. However, spreadsheets are inefficient, can introduce errors into your data, and cannot accommodate processes with multiple users.

With FP&A software, you can save time, minimize errors, and enhance your decision-making, which will improve your business performance and position your finance team as a strategic leader within the company.