FP&A for Growing Companies: Building a Strategic Finance Function
Moving beyond accounting to forward-looking financial leadership.
Key Takeaways
- •FP&A focuses on the future; accounting documents the past
- •Most companies need FP&A capabilities at $5M-$10M in revenue
- •Core FP&A deliverables: budgets, forecasts, monthly reporting, decision support
- •Build vs. buy: outsourcing often makes sense until $20M-$30M in revenue
- •The goal is moving from reactive reporting to proactive strategic finance
Your controller keeps the books. Your accountant files the taxes. But who helps you see around corners, plan for growth, and make better financial decisions? That's the role of Financial Planning & Analysis (FP&A).
For growing companies between $5M-$50M in revenue, FP&A capabilities are often the missing piece. You have accurate financial statements but lack the forward-looking analysis to drive strategic decisions. This guide covers what FP&A is, when you need it, and how to build it effectively.
What Is FP&A and Why Does It Matter?
Financial Planning & Analysis (FP&A) encompasses the budgeting, forecasting, and analytical activities that support strategic decision-making. While accounting looks backward to record what happened, FP&A looks forward to inform what should happen.
Accounting (Backward-Looking)
- • Record transactions
- • Produce financial statements
- • Ensure GAAP compliance
- • File tax returns
- • Manage audits
- • Answer: "What happened?"
FP&A (Forward-Looking)
- • Build budgets and forecasts
- • Analyze performance drivers
- • Support strategic decisions
- • Model scenarios and options
- • Provide leadership visibility
- • Answer: "What should we do?"
Why Growing Companies Need FP&A
Complexity Increases
At $5M+ revenue, businesses have more products, customers, channels, and departments. Basic financial statements don't provide the granularity needed to understand what's driving performance.
Decisions Get Bigger
Hiring decisions, expansion plans, pricing changes, and capital investments all require financial modeling and analysis. Flying by intuition becomes increasingly risky.
Stakeholders Expect More
Boards, investors, lenders, and leadership teams need reporting that goes beyond P&L statements. They want KPIs, trends, forecasts, and actionable insights.
Core FP&A Deliverables
A functioning FP&A capability produces several key deliverables:
Essential FP&A Deliverables
Financial statements, variance analysis, KPIs, and management commentary delivered to leadership within 15-20 days of month-end
Bottom-up or top-down budget developed annually with departmental input, approved by leadership, and tracked monthly
Updated projections (typically quarterly) that extend 12-18 months forward, reflecting current conditions
13-week rolling cash forecast updated weekly, plus longer-term cash projections tied to operating forecasts
Ad hoc financial models for major decisions: pricing, expansion, hiring, capital investments, make vs. buy
Building FP&A: Hire vs. Outsource
For growing companies, the question isn't whether you need FP&A—it's how to get it. Options include hiring dedicated FP&A staff, expanding controller/CFO responsibilities, or outsourcing to a fractional CFO or FP&A service.
Hire FP&A Staff When...
- • Revenue exceeds $20M-$30M
- • You need daily FP&A support
- • Complexity justifies dedicated resource
- • You have strong finance leadership to manage them
- • Budget allows $80K-$150K+ fully loaded
Outsource/Fractional When...
- • Revenue is $5M-$20M
- • You need FP&A but not full-time
- • You want senior expertise you can't afford full-time
- • You need capabilities built before you can hire
- • Budget is $3K-$10K/month
The Quality Gap
A $90K FP&A analyst is very different from a $200K FP&A director. At lower price points, you get reporting and analysis but may lack strategic capability. Fractional CFO arrangements often provide better strategic value for growing companies than junior FP&A hires.
FP&A Maturity Progression
| Stage | Revenue | Typical Setup | Capabilities |
|---|---|---|---|
| 1. Basic | $0-$5M | Owner + bookkeeper | Basic P&L, minimal planning |
| 2. Emerging | $5-$15M | Controller + fractional CFO | Monthly reporting, annual budget, basic forecasting |
| 3. Developing | $15-$30M | CFO + controller | Rolling forecasts, KPI tracking, decision support |
| 4. Mature | $30M+ | CFO + FP&A analyst + controller | Advanced modeling, scenario planning, proactive insights |
FP&A Technology Stack
The right tools make FP&A more efficient and effective. But don't over-invest early— sophisticated tools require sophisticated processes to use well.
Tool Categories
Spreadsheets (Excel/Google Sheets)
Cost: Free (with existing licenses)
Best for: Companies under $15M or with simple models
Limitations: Version control, errors, scalability
Entry-Level FP&A Tools (LivePlan, Float, Fathom)
Cost: $50-$500/month
Best for: Basic budgeting and reporting beyond spreadsheets
Limitations: Limited customization, simpler use cases
Mid-Market FP&A Platforms (Datarails, Jirav, Mosaic)
Cost: $1,000-$3,000/month
Best for: Companies $10M-$50M wanting better planning
Strengths: Excel integration, automated reporting, driver-based models
Enterprise FP&A (Adaptive Insights, Anaplan, Vena)
Cost: $3,000-$10,000+/month
Best for: Complex organizations with sophisticated needs
Strengths: Multi-entity, advanced modeling, enterprise integration
Reporting Cadence & Stakeholder Management
FP&A drives regular communication with leadership and stakeholders. A consistent cadence builds trust and keeps everyone aligned.
| Deliverable | Frequency | Audience | Timing |
|---|---|---|---|
| Cash position update | Weekly | CEO, CFO | Every Monday |
| Monthly reporting package | Monthly | Leadership team | Day 15-20 |
| Forecast update | Quarterly | Leadership, board | 30 days after quarter-end |
| Board package | Quarterly | Board of directors | 5 days before meeting |
| Annual budget | Annually | Leadership, board | December (for Jan 1 year) |
From Reactive to Proactive Finance
The ultimate goal of FP&A is moving from reactive reporting to proactive strategic partnership. Here's how that progression typically unfolds:
Level 1: Reactive
Leadership asks "What happened last month?" and FP&A produces reports. Focus is on historical accuracy. Analysis happens after decisions are made.
Level 2: Informative
FP&A proactively explains variances and trends. Reporting includes "why" not just "what." Leadership has better visibility but still drives the agenda.
Level 3: Analytical
FP&A provides decision support for major initiatives. Scenario modeling helps leadership evaluate options. Finance has a seat at strategic discussions.
Level 4: Strategic
FP&A identifies opportunities and risks before leadership asks. Finance drives strategic initiatives and shapes business direction. True partnership with operations.
The Foundation Matters
You can't be strategic if your basic reporting is unreliable. Before pursuing advanced FP&A capabilities, ensure you have accurate monthly financials within 15-20 days, clean balance sheet reconciliations, and consistent KPI tracking.
In-Depth Guides
Frequently Asked Questions
What is FP&A and how is it different from accounting?
Financial Planning & Analysis (FP&A) focuses on forward-looking analysis—budgeting, forecasting, and strategic decision support. Accounting focuses on recording and reporting historical transactions. FP&A asks 'what should we do?' while accounting documents 'what happened.'
When does a company need FP&A capabilities?
Most companies need FP&A capabilities when they reach $5M-$10M in revenue. At this stage, complexity increases, leadership needs better visibility into performance, and strategic decision-making requires financial analysis that basic accounting doesn't provide.
Should we hire an FP&A analyst or outsource?
Companies under $20M in revenue often benefit from outsourcing or using a fractional CFO with FP&A capabilities. The cost of a quality FP&A hire ($80K-$150K+ fully loaded) may not be justified until revenue exceeds $20M-$30M and you need daily FP&A support.
What tools does FP&A need?
At minimum: Excel or Google Sheets with disciplined templates. As you scale: purpose-built FP&A tools like Adaptive Insights, Datarails, Mosaic, or Jirav can dramatically improve efficiency. The right tool depends on complexity and budget—don't over-engineer early.
What should be in a monthly reporting package?
At minimum: P&L with budget variance, balance sheet summary, cash flow and forecast, key KPIs by department, and management commentary. The package should answer: How did we perform? Why? What's changing? What should leadership know?
How often should we forecast?
Traditional annual budgets are increasingly supplemented or replaced by rolling forecasts updated monthly or quarterly. Rolling forecasts keep projections relevant as conditions change, rather than comparing actual results to a budget that's 6-12 months stale.
What KPIs should FP&A track?
This varies by industry, but common KPIs include: revenue growth, gross margin, customer acquisition cost (CAC), lifetime value (LTV), churn rate, cash conversion cycle, revenue per employee, and department-specific operational metrics. Focus on 10-15 that drive decisions.
How do you create accountability with departmental P&Ls?
Assign each department owner responsibility for their P&L, including revenue (if applicable) and controllable costs. Review variance analysis monthly. The key is consistent methodology for allocations and clear definitions of what department heads can actually control.
What's a reasonable budget for FP&A tools?
Excel is free (beyond your Microsoft license). Entry-level FP&A tools start around $500-$1,000/month. Mid-market solutions like Adaptive Insights or Datarails run $2,000-$5,000/month. Enterprise solutions can exceed $10,000/month. Match tool investment to complexity needs.
How do we transition from reactive to proactive finance?
Start with reliable historical reporting (you can't predict what you can't measure). Add rolling forecasts to see around corners. Build scenario models for major decisions. Eventually, FP&A should be identifying opportunities and risks before leadership asks.
Need FP&A Capabilities?
Eagle Rock CFO provides FP&A services for growing companies. From monthly reporting to strategic planning, we bring CFO-level capabilities without the full-time hire.
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