Financial planning and analysis: the finance team that builds budgets and forecasts and explains results against them.
FP&A, financial planning and analysis, is the part of finance that looks forward. Accounting records what happened; FP&A builds the budget, reforecasts during the year, compares actual results with plan and explains the gaps to management and the board. It sits between the ledger and the decisions made from it.
FP&A is a function, not a formula, but most of its work reduces to one comparison: variance = actual (or forecast) − plan, in dollars and as a percentage of plan, explained by driver.
The plan calls for $5,000,000 of annual revenue. After the second quarter the reforecast is $4,600,000, a variance of −$400,000, or −8% of plan. FP&A splits it into volume, price and mix so management knows which lever to pull.
Time spent assembling numbers rather than analyzing them: most of a cycle can go into reconciling exports. A reforecast that is never compared with what actually happened also teaches nothing. The full guide is what is FP&A.