No other process managed by Finance has as much potential to create or erode business value as FP&A. If done poorly, FP&A is an exercise in minimizing expectations and commitment, which in turn minimizes actual results. Since that activity takes organizational time and resources, it returns a negative return on investment (ROI). If done well, however, FP&A will drive business value.
Impact of Effective FP&A
1. Drives shareholder/business value
2. Drives execution of the Strategic Plan
3. Provides the mechanism to ensure the financial and operational goals of the organization are achieved.
4. Builds organizational awareness of the strategy and each department’s role in achieving it.
5. Ensures the optimal allocation of resources
6. Ensures coordination of initiatives, projects, and programs
Impact of Ineffective FP&A
1. Wastes resources (time and money)
2. Reduces the chance that financial and operational goals will be achieved.
3. Increases the likelihood that departments will act in a cross-purpose manner.
4. Reduces the chances that the Strategic Plan will be executed properly or efficiently.
