FP&A’s Scope: What Is In And What Is Out?
As FP&A professional, how often do you feel that you do something you shouldn’t?
FP&A is an evolving function that falls into the intersection of finance, operations and strategy aimed at driving better decision-making trough insightful analysis, forecasting and goal setting. Having unique access to data about all the activities throughout an organization, it is not uncommon that FP&A teams are often asked to perform tasks which are not necessarily aligned with their core objectives. No wonder that discussions over understanding the scope of FP&A pop up all the time. It is crucial for us as FP&A pros to navigate the boundaries of our roles and maintain a clear focus on adding value to the company.
So, the scope of FP&A: what is in and what is out?
In this blog post I won’t focus on the activities that fall into FP&A’s scope by default, such as budgeting, forecasting and regular analysis. I’d rather highlight those tasks that should not be performed by FP&A teams but often are and vice versa that should be done by FP&A but they are commonly not.
Let’s start with the first group that encompasses some elements that should not be supported by FP&A but often are:
Accounting and help with closing
While FP&A practitioners must have a solid understanding of accounting principles, our focus is primarily on financial analysis rather than day-to-day transactional accounting or monthly closing activities.
Such tasks as reconciling accounts, monthly closing, preparing financial statements are part of the accounting cycle and are typically managed by accounting departments. The role of FP&A teams is to intervene right after that, using those outputs for deeper analysis and insights.
Detailed workforce planning and head count analysis
Hiring, onboarding, and managing personnel are typically the responsibility of human resources departments, rather than FP&A. While understanding workforce dynamics is important for strategic planning and FP&A may provide analysis to support workforce planning efforts, the execution of staffing strategies, talent management activities and detailed headcount analysis fall outside the primary scope of FP&A.
Macroeconomic forecasts
Macroeconomic trends? Of course, they matter. They can impact organizational performance and are usually incorporated by FP&A into financial forecasts or budgets. However, the interpretation and analysis of economic trends are typically the responsibility of specialized professionals. FP&A’s role is to connect those insights to financial models and forecasts.
Reporting historical data and actuals
While FP&A may conduct retrospective analysis to identify trends and patterns, the primary focus is on using historical data to inform future strategic or tactical decisions.
Compiling and preparing historical financial statements, such as income statements and balance sheets, is typically the responsibility of accounting teams, rather than FP&A.
Data pull from disparate systems
FP&A professionals analyze data but typically should not engage in the extraction of data from various systems. This technical task should be handled by IT or dedicated data teams who specialize in integrating and managing data from multiple sources. FP&A teams work with the data to support decision-making.
Understanding what falls outside the scope of FP&A is one thing, but the reality is that many FP&A teams still find themselves supporting these activities. Why does this happen? The reasons for that are numerous. Let’s explore some of them, breaking them down to business and FP&A perspective:
From a business perspective
1. Business stakeholders don’t understand the role of FP&A in the organization, their capabilities, and value
Many business stakeholders perceive FP&A as a general financial support function rather than a strategic partner focused on high-value activities like analysis, forecasting, and decision support. This misunderstanding often leads them to make requests that are outside the FP&A scope, such as transactional accounting tasks or detailed data pulls. When stakeholders don’t appreciate the unique capabilities of FP&A, they underutilize its potential to deliver strategic insights and overload it with operational tasks, diluting its impact.
2. Business stakeholders do not understand the structure of the finance function or ask FP&A analysts directly with inappropriate requests, skipping their managers
Stakeholders often bypass formal request channels, directly approaching FP&A analysts with ad-hoc or low-priority requests. This typically happens because stakeholders either do not understand the structure of the finance function or do not know how to route their requests through the right processes. As a result, FP&A analysts are left juggling tasks that could have been deprioritized or redirected to more appropriate teams, leading to inefficiencies and frustration.
3. Business stakeholders are not able to translate correctly their needs into requests
Stakeholders may lack financial literacy or knowledge of FP&A processes to frame their needs as actionable requests. This disconnect leads to misaligned expectations, wasted effort, and frustration on both sides. FP&A teams may end up spending valuable time clarifying requests or fulfilling vague demands that do not provide meaningful value.
From a FP&A perspective
1. FP&A is not defined as a standalone function with its own scope and responsibilities
In many organizations, FP&A is not distinctly defined as a separate function, leaving it vulnerable to scope creep. Without a formal definition of its responsibilities and boundaries, FP&A can be utilized for any task vaguely related to finance, from data extraction to headcount planning. This lack of clarity weakens the function’s strategic role and creates inefficiencies as FP&A teams get pulled into tasks that do not align with their expertise or objectives.
2. FP&A is not able to screen and prioritize tasks and requests
Even when inappropriate requests come in, FP&A teams often lack the processes or authority to screen and prioritize these tasks effectively. Without a framework for assessing which requests align with their objectives, FP&A teams may take a reactive approach, addressing all requests regardless of their relevance or impact. This can lead to burnout, missed deadlines, and a loss of focus on high-value activities.
3. FP&A does not possess skills and tools to deliver insights and recommendations on other than this range of requests
For FP&A to truly excel in its strategic role, it requires advanced skills such as in-depth financial analysis, scenario planning, and delivering actionable recommendations. However, when these skills are underdeveloped within the team, FP&A may fail to demonstrate its value as a strategic partner. This skill gap can reinforce the perception that FP&A is better suited for operational or transactional tasks, such as data gathering or reporting, rather than high-impact activities. As a result, stakeholders may continue assigning tasks outside FP&A’s true scope, further diverting the team from its core responsibilities and reinforcing misconceptions about its purpose.
So far, we’ve discussed the tasks that fall outside FP&A’s scope but are still supported by the function. The other way round may also be the case: there are high-value activities that should be central to FP&A’s role but are frequently overlooked or undersupported.
Let’s dive into some of the key areas where FP&A should be playing a more prominent role but often isn’t.
Business case assessment
When organizations consider major investments or initiatives, building a strong business case is essential to evaluate feasibility and ROI. FP&A’s expertise in financial modeling and scenario analysis makes it the ideal function to assess these cases. By projecting costs, revenues, and risks, FP&A can provide a clear picture of the potential financial outcomes. Yet, this responsibility is often assigned to operational teams or project managers who may lack FP&A’s analytical depth, leading to less reliable assessments.
Customers and channels analysis
Understanding which customer segments and distribution channels are driving profitability is critical for strategic decision-making. FP&A can provide valuable insights by analyzing revenue, margin, and cost data across customers and channels. This analysis helps prioritize high-value opportunities and highlight underperforming areas. Yet, many organizations exclude FP&A from these discussions, leaving marketing or sales teams to make decisions without a detailed financial perspective.
M&A analysis
Mergers and acquisitions require rigorous financial analysis to ensure they create value. FP&A is well suited to model potential synergies, assess integration costs, and analyze the long-term financial impact of the deal. Moreover, FP&A’s scenario planning capabilities can enable organizations to evaluate best- and worst-case outcomes before committing to a transaction. Unfortunately, M&A analysis is often siloed within corporate development or strategy teams, missing the opportunity for FP&A collaborative input.
New markets entry, new product launches
Expanding into new markets involves significant financial risks and opportunities. FP&A can support this process by evaluating market potential, estimating entry costs, and projecting revenue growth. Despite this, new market entry decisions are frequently driven by operational teams, with FP&A brought in only after key decisions have been made, limiting its strategic input.
Similarly, launching a new product requires careful financial planning to ensure financial feasibility. This includes forecasting development and marketing costs, estimating demand, and calculating breakeven points. FP&A’s insights help ensure that resources are allocated efficiently and that financial risks are minimized. However, product teams often take the lead in this area, with FP&A providing only ad-hoc support, missing the opportunity to influence early-stage decision-making.
Definition of KPIs
Key Performance Indicators (KPIs) are essential for tracking organizational success, yet defining the right KPIs is often overlooked or poorly executed. FP&A’s deep understanding of financial and operational drivers makes it an ideal team to identify KPIs that align with strategic goals. By selecting metrics that accurately measure performance, FP&A can drive accountability and focus across the organization. Yet, in many companies, KPI development is left to individual departments, leading to misaligned or inconsistent metrics.
Risk management
Effective risk management requires identifying and quantifying financial risks, such as market volatility, currency fluctuations, or operational disruptions. FP&A can contribute by modeling potential risk scenarios and their financial impacts, helping the organization prepare mitigation strategies. Despite this capability, risk management is often handled (if performed at all) to other teams or left to leadership, with limited involvement from FP&A. This results in a fragmented approach to risk assessment and decision-making.
While FP&A is well-equipped to support these high-value activities, it is often overlooked due to various reasons on both business and FP&A sides:
From a business perspective
1. Business stakeholders have trust issues with sharing information with FP&A
Business stakeholders may hesitate to share critical information with FP&A due to concerns about data sensitivity, confidentiality, or fear of exposing inefficiencies. In some cases, stakeholders worry that FP&A might use the information to uncover issues that could negatively impact their department. This lack of transparency creates a significant barrier, preventing FP&A from conducting thorough analyses and delivering actionable insights that could benefit the entire organization.
2. Business stakeholders are afraid of being challenged by FP&A
FP&A’s role often involves questioning assumptions, evaluating financial feasibility, and providing alternative viewpoints to guide better decision-making. While this is a strength of the function, some stakeholders may think that FP&A’s scrutiny could delay projects or expose weaknesses in their plans. This apprehension leads stakeholders to exclude FP&A from the decision-making process, opting for a smoother but less informed path.
From a FP&A perspective
1. Lack of FP&A resources, it takes too much time to involve FP&A in decision-making process
FP&A teams often operate with limited resources, which can make it challenging to support all strategic initiatives effectively. High workloads and tight deadlines mean that FP&A must prioritize its efforts, leaving some activities — like customer analyses — off the table. Moreover, involving FP&A in the decision-making process can sometimes be time-consuming, leading stakeholders to bypass the team altogether to save time, even if this results in less robust outcomes.
2. Poor quality of FP&A (no insights are added) or weak FP&A brand
In some cases, FP&A teams fail to deliver high-quality, actionable insights, which diminishes their credibility within the organization. If FP&A consistently provides basic reporting without connecting the dots to strategic implications or offering recommendations, stakeholders may view the function as an operational support team rather than a strategic partner. This “weak FP&A brand” reinforces the perception that involving FP&A adds little value, further excluding the team from high-impact activities.
Defining the scope of FP&A is not just a matter of assigning tasks; it is fundamental to unlocking the full potential of the function as a strategic partner within the organization. Understanding what falls inside and outside the scope of FP&A is the first step toward ensuring that all the unique capabilities of the function are leveraged effectively.
At the same time, addressing the reasons behind scope creep is equally essential. Whether it’s a lack of clarity about FP&A’s role, resource constraints, or trust issues, these challenges must be addressed proactively. Building awareness among business stakeholders about FP&A’s value, empowering the function with the right tools and skills, and fostering a culture of collaboration can help realign expectations and eliminate inefficiencies.
Finally, the scope of FP&A should not remain static. As organizations evolve, so do their strategic priorities and operational needs. Regularly reviewing and redefining FP&A’s scope ensures that it stays aligned with the broader business strategy. This agile approach not only helps prevent scope creep but also positions FP&A to deliver maximum impact.
References:
What’s In, What’s Out: Define the Scope of FP&A Support. Results from Gartner’s survey on financial planning and analytics (FP&A). Gartner, Inc., 2020