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What is FP&A?

April 03, 2023

What is FP&A

FP&A is a business acronym that stands for Financial Planning and Analysis. It refers to the planning, forecasting, budgetingand other analytic-driven activitiesthat drive your company's most vital business decisions and overall financial health.

This article will help you and other stakeholders better understand what FP&A is, and the industry-specific resources needed to create financial forecasts, maintain financial models, and support major corporate decisions.

FP&A is a specialized function related to financial planning, forecasting, and analysis. The role of FP&A is to provide strategic insights that drive business performance.

In plain English, one could call FP&A a company's process for determining financial and business goals, and regularly reviewing and updating those goals. 

The Director of Finance typically guides this corporate financial planning process in collaboration with the Chief Financial Officer (CFO).

FP&A teams are commonly composed of the Director of Finance, CFO, controller(s), accountants, financial analysts, business analysts, data analysts, and other analysis professionals.

These teams work closely with other departments such as accounting, sales, marketing, and operations, to develop and execute financial plans that align with the company's goals. They use financial models, data analytics, and forecasting tools to provide insights into the company's performance, trends, and future opportunities for growth.

The key responsibilities of a corporate financial analyst may include:

  • Budgeting and forecasting: develop and maintain the company's annual budget and forecast to ensure financial targets are met.
  • Financial reporting: prepare and analyze financial reports to provide insights into the company's financial performance.
  • Performance analysis: conduct financial analysis to identify areas of improvement and opportunities for cost savings or revenue growth.
  • Strategic planning: provide financial insights and analysis to support the development of the company's strategic plan.
  • Risk management: identify and manage financial risks that could impact the company's performance or financial position.

Overall, FP&A plays a critical role in helping companies make informed business decisions and achieve their goals.

FP&A Terminology

Here are some common terms used in financial planning and analysis. Understanding a shared set of terms is important for team collaboration and external collaborations.

Budget: a financial plan that outlines a company's expected revenues, expenses, and profits over a period of time.

Capital expenditure (Capex): the funds a company invests in fixed assets such as property, plant, and equipment.

Cash flow: the amount of cash coming in and going out of a company over a period of time.

Cost of goods sold (COGS): the direct costs incurred in producing and delivering a company's products or services.

EBITDA: an acronym meaning Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's operating profitability.

Forecast: a prediction of a company's future financial performance based on past performance, market trends, and other factors.

Gross margin: the difference between revenue and COGS, which represents the amount of money left to cover operating expenses and generate profit.

Operating expenses: the expenses incurred by a company in its day-to-day operations, including salaries, rent, utilities, and marketing. In plain language, operating expenses are commonly called "overhead."

Revenue: the income generated by a company through the sale of products or services. 

ROI: an acronym meaning Return on Investment. A measure of how much profit a company generates from its investments.

Variance analysis: the process of comparing actual financial results to budgeted or forecasted results to identify and explain any differences.

Working capital: the amount of cash and other liquid assets a company has available to cover its day-to-day operating expenses.

History of FP&A Software

FP&A software has its origins in the late 1970's, with the introduction of VisiCalc—the first spreadsheet software--in 1979. This software quickly became popular in finance departments because it enabled people to perform basic financial analysis and modeling, including "What-if" analyses.

In the 1990s, financial software companies such as Hyperion, Cognos, and BusinessObjects emerged, providing more sophisticated financial planning and analysis capabilities. These tools made budgeting, forecasting, and financial reporting much faster and easier.

In the 2000s, cloud-based FP&A software became available, providing even greater scalability and accessibility. Today, it has evolved to incorporate advanced analytics, machine learning, and artificial intelligence (AI), providing finance teams with real-time insights and enhanced decision-making capabilities.

Modern FP&A Software Capabilities

Today, FP&A professionals need a range of tools to manage financial planning, forecasting, and analysis activities effectively.

These are some of the key tools and integrations that may be part of a comprehensive software tool set in 2023:

  • Financial modeling: financial modeling software is used to create and analyze financial models, which are used to forecast future financial performance and evaluate potential business scenarios.
  • Spreadsheets: spreadsheet software, such as Microsoft Excel, is used to organize financial data, perform calculations, and create financial reports.
  • Business intelligence: business intelligence software, such as Grow, Tableau or Power BI, is used to create interactive dashboards and reports that provide real-time insights into financial performance.
  • Enterprise Resource Planning (ERP) integration: ERP software is used to manage financial data, inventory, procurement, and other business operations. ERP systems can provide a single source of truth for financial data and automate many financial processes.
  • Budgeting and forecasting: Budgeting and forecasting software is used to create and manage budgets and forecasts, allowing companies to plan and adjust their financial strategies as needed.
  • Data visualization software: Data visualization software, such as Epicor Data Analytics, Infogram, or Domo, is used to create visual representations of financial data, making it easier to identify trends and patterns.
  • Communication and collaboration tools: Communication and collaboration tools, such as Microsoft Teams or Slack, are used to facilitate communication and collaboration among different departments and stakeholders involved in financial planning and analysis.

Overall, the tools that FP&A professionals use depend on the requirements of their roles and the needs of their organizations. However, having access to the right tools can help your teams manage historical financial data more efficiently, make informed decisions, and optimize financial performance.

Benefits of Modern FP&A Software

Modern FP&A software, such as Epicor's user-friendly version, provides several benefits over manual or outdated financial planning and analysis tools. Some of the key benefits include:

  • Automation: eliminate many of the manual processes involved in financial planning and analysis, saving time and minimizing errors.
  • Accuracy: gain accurate and reliable financial data, helping finance teams to make more informed decisions.
  • Collaboration: facilitate collaboration among different departments and stakeholders within a company, allowing finance teams to work more effectively with other teams.
  • Reporting: access customizable reports and dashboards, making it easy for finance teams to communicate financial performance to stakeholders.
  • Forecasting: leverage advanced forecasting capabilities, allowing finance teams to create accurate and reliable forecasts of future financial performance.
  • Scenario planning: empower finance teams to easily create different scenarios and test the impact of different assumptions on financial performance.

FP&A Benefits by Industry


Financial planning and analysis (FP&A) software offers manufacturers a way to make their businesses more profitable. A good FP&A system offers accurate data collection, budgeting, and forecasting, real-time tracking of metrics, risk modeling, and a range of other analytical tools.

Through this software, your business can identify areas where to make better use of your resources, reduce cost outlay, improve cash flow, cut waste, and make better decisions.


Distributors use financial planning and analysis software to help them stay ahead of the competition. These tools help them track sales data, monitor inventory levels, analyze customer behavior, and forecast future sales and revenue. Detailed reports provide real-time insights into business performance, allowing distributors to identify areas of improvement and make strategic decisions.

By using financial planning and analysis software, distributors can streamline financial processes and reduce the risk of errors by automating routine tasks like data entry or report generation.


FP&A software helps retailers make better decisions about inventory management and pricing through data visualization tools and enhanced reporting. It can help you identify trends and opportunities critical to making decisions about adding new product lines or expanding into new markets.

By leveraging the power of FP&A software, retailers can improve their financial performance and maintain a competitive edge in today's dynamic retail landscape.

Here to Help: How Epicor Simplifies FP&A for Your Business

Epicor Financial Planning & Analysis (FP&A) is Epicor’s licensed FP&A software that allows you to streamline your financial and planning process and make faster, smarter decisions. FP&A is built specifically for people who make and move products: manufacturers, distributors, and retailers.

Epicor Financial Planner (EFP) is a solution that provides a financial storybook by leveraging the combined power of advanced reporting and consolidation, dashboarding, machine learning-powered budgeting, rolling forecasting, what if analysis, and more.

Using EFP, you can enjoy reporting, budgeting, and forecasting on the Web or in Excel, and you can integrate data from various sources, perform detailed analyses, and collaborate with your team in real-time. EFP offers canned financial statements and budget sheets, or you can create custom reports from scratch quickly and easily. 

In the end, Epicor is all about ease and efficiency.

Talk to an Epicor sales rep today to see how we can cut through the complexities and make FP&A a whole lot simpler to manage.