FP&A: The CFO’s Strategic Powerhouse for Business Success

Impact on performance

The impact of robust FP&A capabilities on business performance is stark. A recent McKinsey study revealed that firms with strong financial planning prowess were 2.5 times more likely to lead their industries. This statistic underscores the competitive edge that effective FP&A can provide in today’s cut-throat market.

Indeed, the tangible benefits of mature FP&A functions are difficult to ignore. Research by PwC found that companies with advanced FP&A capabilities achieved 1.5 times higher revenue growth and doubled their EBITDA growth compared to peers. 

These figures paint a clear picture: in the modern business landscape, robust financial planning is not just advisable — it’s essential.

This shift towards more strategic FP&A is not going unnoticed in the C-suite. A survey by Gartner found that a staggering 96% of finance and IT leaders planned to align FP&A with at least one operational planning area by 2024. This statistic signals a growing recognition of FP&A’s role, not just in financial oversight, but in driving overall business strategy.

Increasingly complex

However, the rise of FP&A is not without its challenges. As these teams take on more strategic responsibilities, they must grapple with increasingly complex data sets and rapidly evolving market conditions. 

The ability to quickly assess potential outcomes through sophisticated scenario planning has become an essential tool in the FP&A toolbox.

However, this new reality is reshaping the role of finance professionals within organisations. No longer confined to the back office, FP&A teams are increasingly seen as valued business partners, their insights sought after by decision-makers across all levels of the company.

Perhaps the most valuable aspect of FP&A is that it supports other C-suite executives to push back against a decision made by the CEO. That way, they have the numbers to back them up, rather than rely on gut instinct. 

If they have pushback against a decision made by their CEO, it allows them to have the numbers and reasoning to back that up rather than just their gut.

For CFOs and finance directors, the message is clear: a robust FP&A function may well be the ultimate secret weapon.

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