What is FP&A (Financial Planning & Analysis)?
The finance function responsible for budgeting, forecasting, and analysing performance to guide business decisions.
Definition
Financial planning and analysis is the forward-looking arm of finance that builds budgets, produces rolling forecasts, models scenarios, and analyses actual results against plan. FP&A teams translate strategy into financial targets, monitor key performance indicators, and explain the drivers behind variances so leaders can make informed decisions. Their work spans annual planning, monthly business reviews, long-range planning, and ad hoc analysis such as evaluating an acquisition or new product. Good FP&A depends on timely, accurate actuals, which is why it is closely tied to the ERP and general ledger.
How FP&A Works in ERP
An ERP feeds FP&A with clean actuals from the general ledger and subledgers, often through a built-in or connected planning module where budgets and forecasts are created and compared to actuals. Dimensional data lets teams analyse performance by department, product, region, or project without manual extraction. Many organisations pair the ERP with dedicated planning tools, syncing actuals automatically so plans and reports stay current.
ERP Vendors with Strong FP&A
Frequently Asked Questions
What is the difference between FP&A and accounting?
Accounting is largely backward-looking, recording and reporting what has already happened in compliance with standards. FP&A is forward-looking, using that historical data to build budgets, forecasts, and analysis that guide future decisions. Accounting closes the books; FP&A interprets them and plans ahead. The two work closely together, and a well-integrated ERP gives FP&A fast access to the accurate actuals it needs.
Can an ERP handle FP&A or do you need a separate tool?
Many ERPs include budgeting and basic forecasting that are sufficient for smaller organisations. As planning grows more complex, with driver-based models, multiple scenarios, and large data volumes, companies often add a dedicated FP&A or corporate performance management tool. These tools integrate with the ERP to pull actuals automatically. The decision depends on planning complexity, not just company size.