Financial planning and analysis (FP&A) is driving business growth for clients around the world. But while many firms are confident in their tax services, they aren’t sure how to formally integrate FP&A into their service offerings.
Good news - you’re probably already doing some of it!
But to leverage FP&A, there are some key things to consider.
If you want to confidently offer FP&A as a way to boost client margins, help them scale, and improve their competitive advantage, we’ll walk you through how you can do just that!
The Basics of FP&A
FP&A is presenting information about your client’s finances with suggestions on how to better optimize their operations. It provides clients with an additional perspective which helps take the guesswork out of their actions.
FP&A services can be broken down into two components:
1) Objective information is the facts and the reporting. This information is considered true, even if there are assumptions baked into it.
2) Prescriptive guidance is where you expand beyond the information in the reporting. This is typically advice, insights, and analysis that helps business owners plan for their financial future.
It’s similar to the difference between forecasting and budgeting: a forecast projects the future based on historical information and assumptions, while budgeting is setting a plan that helps the business hit its goals based on that information.
Three Pillars of FP&A
We’ve found the following pillars will keep your FP&A clients happy:
- Make sense of uncertainty - provide accurate forecasts rather than exhaustive precision.
- Present information promptly - the right software tools will help.
- Ensure consistent communication - regular instead of ad-hoc touchpoints.
FP&A for Your Tax Planning Clients
The FP&A process sounds familiar to accountants because it’s similar to tax planning. After all, tax planning is also the process of turning objective information into action.
What this means for you is that FP&A is not significantly different from what you’re already providing.
The main difference is the timelines. While tax planning is often done annually, FP&A is a year-long process of implementing ideas, measuring results, and taking action based on the learnings.
This similarity also helps with understanding who would benefit most and how to get them invested in FP&A. We’ve prepared a list of questions to support you in building your FP&A services. Take time to answer the questions to get started on the right foot.
Who: Finding the ideal clients
Clients who will easily understand the benefits of FP&A know the role of accountants can go beyond annual tax planning. In general, identify clients with these traits:
- High growth: Preferring growth versus keeping the status quo.
- Sophistication: Staying up with trends and innovating their business.
- High revenue: Earning $1 million to $30 million+.
- Committed long-term: Building a long-term strategy with buy-in across the organization.
- Structured management: Identifying key stakeholders in the process and holding them accountable.
- Clean data: Maintaining clear records that are easy to work with and provide accurate output.
- Communicative: Quick to respond and provide regular touchpoints.
Why: The values of year-round planning
When selling FP&A services to potential clients, emphasize that FP&A does away with a great deal of uncertainty.
As you’re working with clients on their tax planning, ask about their goals for the year and biggest stressors, and share how FP&A can help.
Compare FP&A to tax planning, an opportunity for business owners to take back control over something they feel powerless over. It allows them to minimize, predict, and get visibility into their financial future.
Expect FP&A to transform relationships with your client. Instead of a one-time practice, you’ll want to revisit the information and adapt to changes consistently, for example quarterly or monthly.
What: Examples of what’s included in FP&A services
Emphasize that FP&A services are tailored to client needs, incorporating elements like:
- Annual operating plans
- Rolling forecasts
- Scenario planning
- Departmental budgeting
- Workforce planning
- Key performance indicators (KPIs) tracking
- Cash flow forecasting
- Customized reporting packages
How: Establishing workflows
Follow these steps when defining your FP&A services so that you can offer them confidently:
- Get team buy-in
- Set clearly defined roles
- Define the workflow
- Upgrade your tools
- Set expectations for meetings
- Regular client touchpoints
Technology is Essential for FP&A Services
The right technology can make or break the success of your FP&A services. Focus on the following features when choosing an FP&A platform:
- Automation: Free up time to crunch the numbers by automating the work that generates them.
- Integrations: Decrease headaches to ensure it works with the tools you’re already using.
Ease of use: The best tool is always the one you’ll actually use. - Functionality over form: Some platforms look great, but are built to be shown off, not used.
Jirav is a platform that delivers on all of these points. It helped AccountingDepartment.com deliver advisory services and fueled Summit CPA’s growth with a real-time, cloud-based solution.
Request a free demo to see our dynamic, purpose-built platform in action.