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How You Can Move From Accounting to FP&A

Mike Triantos
Posted by Mike Triantos on Apr 11, 2023 1:11:07 PM

As an accounting firm, you provide value to your clients by giving them confidence. They have confidence in their compliance and trust that their historical information is accurate.

The next level of accounting services is when you are able to shift from giving confidence in the historical data, to confidence in what’s coming next — looking forward. The good news: this forward-looking confidence is what they really want, and is a revenue growth opportunity for accounting firms.

This forward-looking strategic deliverable is FP&A, and it’s a destination in the much-discussed CAS movement. In this article, we’ll share how your firm can move to FP&A, and why it doesn’t have to be a giant leap from what you’re already doing.

You’re already an expert on historical financials. You’ve delivered income statements, balance sheets, and cash flow statements with a historical lens. The next step in evolving your services is using your skills to look to the future using FP&A. It might seem like a big change, but it’s easier than you think.

Let’s dive in.

Defining FP&A

FP&A (financial planning and analysis) is an umbrella term for services that help businesses understand their financial health and plan for the future. It expands on the usual historical deliverables like income statements, balance sheets, and cash flow statements with deeper analysis and forecasts.

Generally speaking, FP&A can include any of the following:

How does FP&A differ from accounting?

You can consider FP&A as an evolution of accounting.

For many, accounting is treated like a necessity that enables them to file their taxes and stay compliant. But FP&A is when those numbers start to tell a story about a business.

FP&A doesn’t just summarize the past, it looks to the future. Forecasting, budgeting, and strategic planning include working with clients to help them understand where their business is headed.

Most importantly, FP&A needs to be adaptive. Every month, new information must be imported that can shape forecasts or require a change in strategy. As you move towards FP&A, you also need to move towards providing real-time updates and insights.

If you don’t have real-time data, you’re stuck in that accounting space of providing information after its impacts have already been made.

Moving from accounting to FP&A

How do you move from accounting to FP&A? It doesn’t mean scrapping everything and starting from scratch. Follow these steps and you’ll find it’s easier than you think.

Connect with your clients

Before you shape your FP&A services, you need to know the wants of the people who you’ll be providing the service to: your clients.

Take a look at some of your favorite clients that you have a strong relationship with. Would they benefit from a more fleshed out service? If so, see if you can set up time with them for a chat.

Focus on asking open ended questions to get the best answers which will guide your services. Questions like “Where do you want your business to be in the next 1-2 years,” “How will you monitor progress on these goals” and “How will you hold your team accountable to these goals.” These are questions that either inform or are answered by your FP&A services.

You’ve got the historical, now look forward

The biggest shift in going from accounting to FP&A is making the connection between the historical data you’re already collecting and the vision your clients have.

This connection is made by building out projections and getting to know the targets your clients have set out to achieve.

Something you could offer is a 12-month forecast aligned to the goals of your client. This requires a discussion to understand where they want to go, then mapping from their historical information to where they want to go.

Then on a regular basis, you can provide variance analysis to show what’s on track or off track and allow for quick corrective action.

The firms who are most successful with FP&A are the ones who can communicate the story the numbers are telling, and provide clients with the key drivers that actually define the results in their company.

While it’s a shift in thinking, it’s a small step in practice. You’re already an expert on delivering historical information, but forecasts and budgets are built off of the same data. You aren’t doing completely new work, but rather adding an extra layer to your work based on the information you already have.

Time for FP&A in your firm?

The best part about offering FP&A is that data shows your clients want more from their accounting firms.

Again, it comes down to confidence. While it’s nice to have confidence in the accuracy of what’s already happened, what everyone really wants is to know where they are going.

There is a good chance that your firm has all the skill needed to provide this to clients. With the right tools and a forward-looking view, you can provide a glimpse into the future and confidence about your clients’ direction in their business.

The opportunity is there, and it’s a matter of building off the historical, then implementing FP&A to give the analysis and confidence your clients really want. 

Topics: Financial Advisory


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