Grace is Cledara's in-house financial accountant, who thrives in businesses with fast-paced growth. Grace's role is to provide insights to the wider business, she has been heavily involved in cross-functional projects stretching across the introduction of global benefits, financial modelling and KPI reporting procedures.
What is FP&A?
Financial Planning and Analysis (FP&A) is a range of activities such as planning, budgeting, forecasting, and financial analysis. It involves:
- Analyzing and calculating data to provide strategic guidance to executives and boards of directors.
- Supporting organizations to make informed decisions about their present and future financial performance.
- Predicting how various financial activities could impact future investments and devise an action plan to mitigate risks.
- Optimizing organization-wide performance by managing cash flow, minimizing financial threats, and achieving revenue goals.
Overall, FP&A is the backbone of every company-wide strategy. Business leaders rely on them to support profitable decisions in the fast-changing business environment. That’s why having a specific team dedicated exclusively to identifying new opportunities and anticipating unexpected financial risks to improve business growth is essential.
The Top 10 FP&A Software Tools
Liveflow is a platform that can transform your team's spreadsheets into a real-time FP&A platform, simplifying the workflow for all stakeholders from day one.
With Liveflow, you can:
- Quickly import QuickBooks reports into Google Sheets.
- Set up automatic updates to save time.
- Consolidate multiple entities for a better overview.
- Monitor your vendor spending.
- Keep track of live budget vs. actuals.
- Get a real-time overview of your balance sheet.
- Create a live forecasting P&L dashboard to streamline your financial planning.
- And more.
Best for: Liveflow is a great option for mid-sized companies.
2. Workday Adaptive Planning
Workday Adaptive Planning is a powerful tool that helps organizations create better reports, plan more strategically, and conduct in-depth analyses. Some of its key features include:
- Headcount planning
- Revenue management
- Expense management
- Scenario modeling
- Profitability analysis
- Balance sheet and cash flow
- Sales planning solutions
- Long-term financial planning
- Cloud-based ERP integrations
- Spreadsheet software synchronization
- Custom reporting features, including scorecards and benchmarking with external data.
Workday Adaptive Planning is known for its easy-to-use platform and interdepartmental collaboration capabilities. It integrates with a wide range of ERP and business solutions, such as Salesforce and Sage.
Additionally, Workday Adaptive Planning offers proficient customer service.
Best for: Workday is an excellent solution for large enterprises, but it also provides solutions for medium-sized organizations.
Cube is a financial planning and analysis (FP&A) solution that provides a centralized data source for companies to manage their entire financial planning process. It offers the following features:
- A centralized data source that allows departments to review and report on financial and operational data.
- Roles and validations to ensure the security of your data, creating an audit trail.
- Business and financial integration with tools like Excel, Google Sheets, NetSuite, QuickBooks, Sage, and more.
- Scenario planning to test financial opportunities and risks.
- Custom dashboards, including data visualization and templates.
Pricing: Cube offers three different pricing plans:
- Essentials Plan, starting at $1250/month, includes two admin and two contributor accounts, spreadsheet integrations, unlimited scenarios, customizable templates, and more.
- Premium Plan, starting at $2,450/month, includes all of the Essential Plan features, plus a dedicated success manager, multicurrency capabilities, and more.
- Enterprise Plan, starting at $3,750/month, includes customized user accounts, all of the Premium Plan features, plus a custom feature package and more capabilities associated with customer success.
Best for: Cube is suitable for companies of different sizes, especially small to mid-sized finance departments.
Causal is a financial management platform that improves a company's financial processes, with a focus on strategic decision-making. Its key features include budget control and management, forecasting management, data management, variance analysis, and custom analytics.
Pricing: Causal's plans are divided into three categories:
- Free Plan, ideal for personal use or early-stage companies.
- Startup Plan, starting at $250/month for companies with 10 to 25 employees. It includes unlimited models, 15 scenarios, 200 category items, standard data integrations, and budget vs. actuals comparison.
- Business Plan, with customized pricing for companies with 50 to 1,000 employees, large data sets, and multiple stakeholders. It includes 5+ members, premium data integrations, unlimited items per category, and more.
Best for: Causal is a great option for companies with 50 to 1000 employees.
Anaplan is a business performance solution that’s ideal for enterprise-level companies. Its key benefits include:
- Connecting people with data and plans
- Facilitating cross-functional financial planning and feedback in large organizations
- Offering flexible models, forecasts, and scenario solutions that save companies time and effort
Some of Anaplan's most important features are:
- Multi-dimensional and consistent scenario planning and modeling
- A library that includes 200 pre-built models, allowing finance professionals to enhance their processes
- Intelligent feedback and real-time insights through AI and machine learning to ensure the best outcomes
- Several third-party integrations and extensions cater to FP&A professionals to promote collaboration and communication.
Pricing: Pricing is available by contacting the company. The platform offers three pricing tiers:
- Basic, which includes essential modeling and planning features
- Professional, which offers additional security and compliance features (e.g., App lifecycle management)
- Enterprise, which includes the same Professional Plan but also the highest level of customer service.
Best for: Anaplan is best used within an enterprise environment, although its Basic or Professional plans may be suitable for medium-sized businesses.
It’s important to note that Anaplan doesn’t only focus on FP&A use cases. If you need a highly specialized FP&A tool, Anaplan could be overly complex.
Planful is a financial performance management platform that enables organizations to make more impactful business decisions. Its core features include:
- Streamlining business-wide planning
- Improving budget management and consolidations
- Optimizing reporting
- Providing visual analytics
Pricing: Pricing information is currently unavailable.
Best for: Planful is suitable for small, medium, and large companies.
Prophix is a Corporate Performance Management (CPM) software that helps organizations maximize profitability and minimize error-prone risks. Its essential features include:
- Real-time financial insights (budgeting, forecasting, and planning)
- Data visualization and analysis
- Custom reporting
- Variance analysis
- Integrations with other systems (e.g. CRM and ERP systems)
- Multiple scenario planning
Pricing: Pricing information is currently unavailable.
Best for: Prophix is suitable for enterprises of all sizes, from small to large businesses.
Jirav is a business planning and FP&A solution designed for smaller businesses. The company offers:
- An intuitive interface
- Native integrations to enhance data visibility (e.g. ERP systems)
- KPI tracking capabilities
- Forecasting and modeling management
- Customized reporting
Unlike similar Excel platforms, Jirav is a purpose-built solution that differs from the spreadsheet model. If you're an FP&A professional looking to say goodbye to spreadsheets, Jirav may be the solution for you.
Pricing: Jirav offers three different plans:
- Starter Plan, starting at $500/month. This plan includes two users, up to three custom dashboards and reports, and useful features for short-term financial planning. A 14-day free trial is also available.
- Professional Plan. This plan costs $12,000/year and includes features suitable for mid-range planning, up to five users, and up to eight dashboards and reports.
- Enterprise Plan. This plan has customized pricing and includes all features from the Professional Plan, up to 15 users, and up to 16 custom dashboards and reports.
Best for: Jirav's range of features and pricing plans make it ideal for organizations with 5 to 500 employees.
Vena is a complete financial management platform that is ideal for centralized budgeting and workflow, with similarities to Excel. This makes Vena an extremely flexible platform.
Some of Vena's most notable features include:
- Annual budget management
- Conducting monthly, yearly, or quarterly forecasts
- Real-time analysis and insights
- Variance analysis
- A single view of the financial operations of the company
Pricing: Vena does not make its pricing publicly available.
Best for: FP&A professionals who need a cross-departmental tool that enhances collaboration among stakeholders, especially in fast-growing companies.
Abacum is a financial strategy software designed to help modern companies drive business accountability with faster revenue forecasts, headcount planning, financial scenarios, and easy-to-share board reports. Some of the most relevant features of Abacum include:
- Real-time financial and operating reporting templates
- Interactive analysis and visualizations
- Automated workflows with budget owners
- Custom multi-dimensional financial modeling
- Financial scenario planning
- Manual data imports through CSV and spreadsheets
- Several ERP, HRIS, BI, and CRM integrations (e.g. Netsuite, BambooHR, Tableau, and Pipedrive)
Pricing: Abacum does not publicly disclose its pricing. The platform offers two plans:
- Reporting plan, which is ideal for companies seeking complete FP&A reporting automation. It includes operational KPIs and financials in real-time, easy-to-use financial reporting templates, and workflow automation that allows you to deliver accurate real-time insights.
- Planning plan, which is ideal for organizations seeking comprehensive financial forecasting, headcount planning, and what-if analysis. It includes bottom-up and top-down forecasting and custom budgeting workflows to streamline the planning process and strategic decision-making.
Best for: Abacum is a perfect tool for high-growth companies that need to achieve better decisions with faster execution.
Is Software Worth It for FP&A Planning?
It’s possible to create key financial forecasts using Excel. There are full-stack modeling courses that teach you how to use pivot tables effectively, and, let's be honest, Excel is an amazing tool for finance professionals. It is still the most popular FP&A tool. In fact, according to a survey conducted by Battery Ventures, 86% of finance teams use Excel to make forecasts and budgets.
Despite this, for fast-growing and large companies, Excel can result in inefficiencies. Manual work and spreadsheet iterations can lead to errors, data can become outdated and unreliable, and insights can be hard to share in real time.
As a result, software vendors have identified and addressed these challenges. According to the Association for Finance Professionals, 52% of FP&A practitioners say they need better planning and enterprise resource planning software because most planning and analysis are manually manipulated in spreadsheets.
Modern platforms consolidate workflows into a single source of truth by:
- Providing access controls
- Offering cross-functional collaboration functionalities
- Integrating data
- Providing web-based modeling and reporting.
Thus, FP&A professionals can avoid manual, error-prone spreadsheets, improve workflows, and focus on strategic matters instead. This, in turn, allows them to seamlessly integrate Excel spreadsheets.
Who Should Be Thinking About FP&A?
FP&A (Financial Planning and Analysis) is a strategic approach that involves multiple roles, each with its own set of responsibilities. It is overseen by the CFO, who leads the company's finance team.
Typically, FP&A roles include:
- Financial Analyst
- FP&A Manager
- FP&A Director
Let's examine them more closely.
A financial analyst's main obligations could include:
- Analysis and tracking: Analyzing and tracking overall company financial data such as expenses, revenue, and spending.
- Measurement: Comparing forecasts with actual results to discover specific patterns and trends.
- Reports: Creating financial reports for executives, such as P&L statements, to help them make informed decisions.
On the other hand, the FP&A Manager's main duties may include:
- Collaboration. Working closely with upper management, such as executives and boards of directors.
- Short- and long-term planning. Monitoring the company's current financial health to improve its strategy in both the short and long term.
- Scenario development. Creating financial scenarios for specific purposes and identifying patterns, such as risks, that could impact the organization’s growth.
- Guidance. Advising executives on how to invest and reallocate resources (e.g., cost savings) to achieve sustainable growth.
Finally, FP&A Director duties may include:
- Leadership: Lead the FP&A team in high-level budgeting, forecasting, financial planning, and implementation.
- Insightful recommendations: Providing scalable advice on investments, sourcing, and cost reduction to CFOs
- Strategy optimization: Improving financial processes, creating strategic systems, and enhancing cross-functional communication tailored to business needs.
What are the Main Responsibilities of FP&A Teams?
You already know who you are thinking about in FP&A. So, what are the core responsibilities of FP&A teams? In general, FP&A teams are responsible for:
- Profit and Loss (P&L) statement: Calculates the costs, revenues, and expenses of the company for a specific period.
- Balance sheet: Reflects the financial position of the organization considering investments, business liquidity, and debts at a particular time.
- Cash flow statement: Measures the inflow and outflow of money from the company during a specific period.
- Budgeting and forecasting: Projects budget based on different scenarios and forecasts how additional factors (e.g., economic downturns) would impact outcomes.
- Financial planning: Defines the organization’s financial strategy and proposes solutions related to expenses and returns that help it achieve its business goals.
- Decision outcomes: Provides insight and guidance to the organization's leadership on operational finance processes (e.g., The right SaaS resource allocation and other business decisions).
6 Essential FP&A Best Practices
We've already discussed the meaning and importance of FP&A, as well as its essential responsibilities and tools. Now, you may be curious about the FP&A best practices to follow.
Our recommendations include:
- Establishing realistic budgets and forecasts
- Always overlooking your plans
- Engaging key stakeholders in the planning process
- Checking appropriate financial metrics
- Performing variance analysis & scenarios
Let’s take a closer look.
Establish Realistic Budgets and Forecasts
Our first suggestion is to create practical budgets and forecasts. To accomplish this, it is crucial to:
- Understand your organization's past and current financial data.
- Identify specific trends and patterns that can help you develop future estimates (e.g., by reviewing financial statements, financial reports, etc.).
- Gather all of this data and create realistic and accurate budgets and forecasts for both short-term and long-term goals.
It's worth mentioning that when identifying opportunities, it's also important to assess the associated risks. So don't hesitate to examine the balance between revenue and expenses and, most importantly, look at market trends and economic conditions.
Always Overlook Your Plans
Especially in today's fast-paced business climate, it’s crucial that all finance plans are monitored, updated, and iterated regularly.
Accordingly, organizations can ensure that their financial planning and analysis strategy is aligned with their business objectives.
We recommend that you:
- Review your financial reports monthly
- Measure and analyze essential key performance indicators (KPIs)
- Evaluate the short-term and long-term scalability of your current financial strategies
For instance, your organization may need to adjust the SaaS budget because IT requires more funding for other purposes. It will be necessary to reevaluate your financial reporting software to reduce expenses in the appropriate areas and make your cash flow more efficient.
Engage Key Stakeholders in The Planning Process
Nearly all planning within organizations requires cross-functional cooperation. Financial planning is no exception. To improve decision-making in this area, it is essential to engage key stakeholders (such as board members and senior management) early in the process. PwC reports that 50% of CFOs consider C-suite collaboration and finance as a partner across the organization to be their top priorities.
To achieve this, we recommend requesting accurate insights and feedback from stakeholders. A crucial aspect is ensuring that:
- Your financial plan meets their needs.
- Your financial plan stays better aligned with business goals and objectives.
Check Appropriate Financial Metrics
To conduct a sound financial analysis, it is necessary to monitor suitable financial metrics. Some of the key metrics for FP&A may include:
- The current ratio, quick ratio, and liquidity ratio
- Return on investment (ROI)
- Gross profit margin and net profit margin
- Costs of goods sold
- Budget variance
- Debt to equity and return on equity.
By accurately measuring these and other pertinent metrics, businesses can gain a clearer understanding of their actual financial performance.
Don’t Forget to Perform Variance Analysis & Scenarios
Variance analysis is the process of comparing actual financial outcomes to forecasted outcomes. By doing so, companies can identify areas for optimization. This process is important because it enables organizations to:
- Adjust their financial approach
- Enhance financial outcomes
- Make actionable recommendations. For instance, reducing hiring costs in a specific sector in order to boost financial performance.
On the other hand, financial scenarios and sensitivity analysis play a critical role in assessing the impact of external factors on financial performance. This allows organizations to:
- Take action to address any challenges that may arise.
- Identify potential financial risks and make contingency plans to mitigate them.
3 SaaS Challenges that Affect FP&A
As you can see, maintaining your organization's financial health and anticipating growth strategies that align with your business objectives require effective FP&A. Particularly for resource costs that represent a significant expenditure on a company's profit and loss statement (P&L). Here's where SaaS management tools come in.
Today, SaaS is the second most relevant expense for companies after headcount. According to Cledara insights, the SaaS market experienced 6.7% growth in Q1 2023 over Q4 2022, with software spending increasing by 1.7% from March to February. However, it is estimated that 30% of software spend is wasted.
Clearly, poor management of tool allocation can heavily impact an organization's FP&A. Conversely, if your use and spending of SaaS are managed efficiently, it is most likely that you can make your FP&A without friction.
If you want to plan a scalable FP&A, it’s a priority to know the challenges of SaaS management and their appropriate solutions. These are:
- Inaccurate SaaS forecasting and budgeting due to shadow IT
- Lack of visibility
- Error-prone and inaccurate SaaS stack monitoring
Let’s dive into each challenge.
- Inaccurate SaaS Forecasting and Budgeting Due to Shadow IT
As a result of inadequate software training and the demand for better alternatives, many departments engage in shadow IT. In other words, they use SaaS tools, hardware, and applications without proper authorization, management, or support from IT, finance, or other relevant stakeholders. According to a Cledara survey, 59% of organizations estimate that their employees have approximately 93% unreported SaaS subscriptions.
Generally, employees create shadow IT in good faith. They sign up for tools to streamline their workflows. However, it’s not something that should be taken lightly.
Shadow IT leads to increased variability in costs, hampers accurate forecasting, and results in imprecise SaaS budgeting. Ultimately, it jeopardizes the overall health of SaaS spend management.
To ensure accurate budgeting and forecasting, you need a SaaS management solution that offers granular data, including:
- Identifying unauthorized licenses
- Providing real-time insights
- Determining the software subscriptions that offer the greatest value to your team
- Discovering which applications your employees underutilize or do not use at all
Plus, you can easily spot hidden software costs and unnecessary subscriptions.
- Lack of visibility
Tracking automatic annual or monthly renewals of SaaS subscriptions can become overwhelming. Especially when you have a full SaaS stack.
A lack of visibility into your stack can eat into your company's SaaS budget by causing you to:
- Lose the opportunity to check whether you are paying for the appropriate licenses.
- Not end a contract before auto-renewal occurs, resulting in severe penalties and the inability to renegotiate vendor contracts.
This highlights the need to make efficient decisions to save costs. By using a SaaS management tool, you can:
- Easily track and renew SaaS applications, as well as receive alerts about upcoming renewals.
- Compile purchase and subscription receipts.
According to Gartner, by 2026, half of the companies using multiple SaaS apps will centralize their stack management and analysis. And it's easy to see why. As a whole, SaaS management tools help you identify all subscription costs and prioritize them. This will help you analyze and plan your finances for SaaS more efficiently.
- Error-Prone and Inaccurate SaaS Stack Monitoring
Many companies rely on spreadsheets to track their SaaS applications’ information, such as:
- Software licenses
- Renewal dates
- Software usage by department.
Spreadsheets are not only time-consuming, but they are also prone to human error and inaccuracies due to constant iteration. The finance team spends valuable time gathering information and double-checking it, which decreases the time available for strategic financial planning and analysis. At the end of the day, this can negatively impact the organization's ROI.
Luckily, automating SaaS management with a proper solution can help mitigate these issues.
By doing so, you and your team can:
- Obtain real-time SaaS usage and spending information from a single source of truth.
- Increase control over SaaS spending and return on technology investments.
- Simplify the SaaS investment approval workflow.
- Establish an approval process for software acquisitions.
Take Control Of Your SaaS Stack to Enhance Your FP&A
As your company grows, implementing Financial Planning and Analysis (FP&A) becomes a top priority. But when it comes to managing your SaaS spending, it can be labor-intensive and time-consuming.
Fortunately, there are tools available that can help you gain visibility into all your SaaS expenses, improve your team's performance, and provide long-term accuracy. We're talking about Cledara.
Cledara is the only SaaS management tool that helps Finance teams:
- Get complete visibility of their SaaS expenses.
- Gain actionable insights for better contract and purchasing negotiations, right-sizing, rationalizing, and cost-effectively optimizing their stack.
- Ensure compliance and reduce risks with better SaaS governance, preventing inaccurate onboarding and offboarding processes.
The bottom line is that Cledara allows FP&A to harness the power of SaaS optimization.
To learn more about how Cledara can improve your SaaS costs, budget, and forecasting, book a demo today.