COVID showed business owners they need to plan better and understand finances more if they are going to survive what the economy can throw at them. And with new technology, accountants can offer these services at scale like never before.
To start taking advantage of this demand and drive new revenue to your firm, take these six steps for an effective FP&A rollout.
Step 1: Committing to the Strategy
Before you start taking any action, you need to define your strategy. A good strategy has three components.
The long-term horizon is the end goal of your firm’s FP&A services. While a short-term experiment has less risk, a long-term strategy and investment is more likely to pay off and increase the value of the firm.
Then comes the time investment to learn. Set milestones and checkpoints for what you need to have developed and when. Once you have these goalposts planted, it’s time for strategic planning.
The last component is committing the resources. With a long-term horizon, milestones, and strategic planning, you’ll know what’s needed to achieve your goals effectively.
Step 2: Understanding the Methodologies
With FP&A, you need to help your clients along a journey from simple reports to advanced planning and analysis.
Business owners have a basic understanding of bookkeeping and accounting. From there, you can introduce reports and dashboards which present financial data simply and intuitively.
Then it’s time to get into the actual planning with budgets and forecasts. This is where you start to tailor the what to the needs of the client. Think about using variance analysis, custom budgets, rolling forecasts, and future planning comparisons like scenarios, departments, and workforce.
Think of FP&A as a four-part cycle:
- 1. Build a plan based on the client’s needs and goals
- 2. Build reports that track progress towards these goals
- 3. Have a regular cadence of analyzing and reviewing
- 4. Roll-forward and adjust monthly, quarterly, or annually
FP&A isn’t about being right every time; it’s about learning and adjusting. The what is less important than the why. If you can explain why something went off track, you can adjust the plan. But an unexplained disruptor is a big problem.
Step 3: Leverage Technology to Standardize
To deliver an effective FP&A service, you need to move towards providing a service on top of the regular deliverables. This means more time building, analyzing, and meeting. Reduce the time spent on reporting and the chances of mistakes by using technology to automate the actuals and structure the data.
Work backward from your goal. Set a standard for your deliverables and then invest in what yields those results. This means defining how you’re bringing data in and the outputs that you’ll be providing and leveraging technology to bridge the two together.
Step 4: Pick Your First Potential Clients
Once you’re ready to launch your FP&A services, who do you roll it out to? The clients you should look to share a couple common traits.
For businesses focused on growth, FP&A helps them set a plan, measure results, and learn from their findings. They have goals they want to achieve. Planning helps them set those goals, the reports let them know if they were successful, and the analysis gives them the best odds of hitting them.
Another trait to look for is owner buy-in. They need to see the long-term strategy and benefit to be a good fit. FP&A is like a conversation, both parties need to be contributing to make it really work. If the owner is going to show up because they see the value, you’ll be able to do your best work.
Finally, they have to be committed to good data hygiene. When you’re trying to provide data-based forecasts and measure results, bad data makes your work meaningless. How can you provide advice on their future if you don’t even know their past?
Step 5: Staff For the First Phase
Having a key stakeholder is essential. This will be the person who heads the FP&A initiative and is accountable for the results.
The executing roles in FP&A are the expert and analyst. The expert is your go-to for best practices on financial models while the analyst updates, maintains, and produces reports using the models.
For supporting roles, a technical person will be responsible for the technology you use to provide your services. They’ll manage the software and tools you use and keep them operating. Sales works on onboarding new clients for your FP&A services.
When you’re ready to expand, consider adding a marketing team to speed up your lead generation.
Step 6: Package and Price Your Services
First, figure out if you’re going to do hourly billing or subscription pricing for your services.
Subscription billing is easy to budget for and rewards your efficiency. If you can do the same quality of work quicker, you’re still paid the same amount. Hourly billing is much harder to plan for, and scope creep becomes a real problem.
Have clearly set deliverables to keep client expectations in check. If you go the subscription pricing route, consider offering different bundles with additional deliverables in each. This makes your services fit a wider range of clients.
In the first phase, you should always be evaluating your prices. Are you overextending yourself and juggling too many things? Consider upping your prices. Not enough new clients? Your prices might be too high. You probably won’t have perfect pricing right away, but you’ll find the sweet spot with time.