Contributor:
Sara Nager | Manager, Risk & Accounting Advisory Services
Cherry Bekaert offers corporate and strategic finance services to companies with financial planning and analysis (FP&A), financial operations and strategy, and data analytics needs. We provide a wide range of services focused on areas such as financial and operating model development, cash management, budgeting, forecasting long-term planning, operating expense (OpEx) benchmarking and much more.
Read our frequently asked questions below to learn more about Corporate Finance & Strategy and how these services can benefit your business.
Q: What is Corporate Financial Planning?
A: Financial planning is the process of creating a roadmap to achieve your business’s financial goals. It involves:
- Assessing your organization’s current financial situation
- Identifying potential financial, operational and risk barriers to your organization
- Setting business goals
- Developing a strategic plan to reach goals
Q: Why is Financial Planning Important and Why do Businesses Need FP&A?
A: FP&A is important because it helps you achieve financial goals by providing a clear path towards your objectives. It can also help you manage finances more effectively, reduce financial stress and increase financial security. Most importantly, it will allow you to be proactive instead of reactive when running into key inflection points for your business.
Q: Can You Explain the Differences Between FP&A and Accounting?
A: Accountants are doers. They book journal entries, perform reconciliations and prepare financial statements; their focus is primarily on historical and present-day outcomes. FP&A are reviewers in that they prepare forecasts and budgets, perform variance analyses, and prepare management and board presentations. Financial analysts focus primarily on present-day and future outcomes.
Q: What are the Key Components of Financial Planning?
A: Good corporate strategic financial planning begins with goal setting. This involves setting specific financial targets that align with the company’s overall strategic objectives. These goals should be measurable, achievable and time bound. Key components to evaluate include budgeting, forecasting, cash management, capital planning, KPIs and risk management.
Q: What is the Difference Between Forecast, Budget and Plan?
A: Budgets and forecasts are focused on short-term financial goals of the company. Budgets are a month-to-month plan for the next fiscal year, while forecasts are fiscal year updates to the budget based on actual year-to-date activity, typically updated on a monthly or quarterly basis by the FP&A team. Plans typically have a three- to five-year outlook, consider the long-term direction of the company and capital or financing needs.
Q: What is the Cost of FP&A and Can I Outsource or Co-Source the Services?
A: An organization’s FP&A costs vary depending on the size and maturity of the company, whether they have the capacity for an in-house team, the sophistication of existing processes and tools and the needs of the business. FP&A can be fully outsourced or co-coursed. Experienced professionals can work alongside your current FP&A function and be scaled up or down depending on your business needs.
Q: What is Financial Analysis?
A: Financial analysis is the process of evaluating financial data to make informed decisions. It involves assessing financial statements, ratios and trends to gain insights into a company’s financial health and performance.
Q: What are the Different Types of Financial Analysis?
A: The different types of financial analysis include ratio analysis, trend analysis, comparative analysis and cash flow analysis.
Q: What is Financial Forecasting?
A: Financial forecasting is the process of predicting future financial outcomes based on historical data and current trends. It is used to estimate future revenues, expenses and profits.
Q: What are the Benefits of Financial Forecasting?
A: Financial forecasting can help companies to plan for future growth, identify potential financial problems and make informed decisions about investments and strategic initiatives.
Q: What is Financial Modeling?
A: Financial modeling is the process of creating a mathematical representation of a company’s financial situation. It is used to simulate different scenarios and predict the impact of potential decisions on the company’s financial performance.
Q: What are the Common Financial MModeling Techniques?
A: Depending on the unique needs of your company, there are common financial modeling techniques to help better analyze, predict and plan for future objectives. These techniques include:
- Discounted cash flow analysis
- Scenario analysis
- Sensitivity analysis
- Historical financial statements analysis
- Seasonal analysis (looking at cash Inflows with historical data, new customer projections)
- Gross or net burn rate analysis
- Cost-benefit analysis
- Return on investment (ROI) analysis
- Off-shore and near-shore analysis
Q: What is Variance Analysis?
A: Variance analysis is the process of comparing actual financial results to the budgeted or expected results. It is used to identify areas where actual performance differs from expected performance and to determine the reasons for the variance.
Q: What are the Benefits of Variance Analysis?
A: Variance analysis can help companies identify areas where they are over or underperforming and to take corrective action. It can also help companies improve their budgeting and forecasting processes.
Q: How can Data Analytics Help with Financial Analysis?
A: Data analytics plays a crucial role in financial analysis. From time-saving automation techniques to identifying trends in key performance indicators, skilled analysts can streamline processes and reporting to enable more strategic reporting and decision-making.
Q: Is Financial Analysis Accurate and How Can I Trust It?
A: Co-sourcing the FP&A function by having a trusted advisor and advocate working alongside your accounting and finance organization is valuable. FP&A requires accurate and reliable data to make informed decisions. Poor data quality can lead to inaccurate forecasts, incorrect budgeting and flawed analysis. A well-executed FP&A plan should align with the company’s overall strategic objectives. If there is a disconnect between FP&A and the company’s strategy, financial planning decisions may not support the company’s goals.
How Cherry Bekaert Helps Guide You Forward
Cherry Bekaert’s Accounting Advisory practice offers a comprehensive suite of corporate and strategic finance services, from financial planning and analysis to data analytics and variance analysis. Our team of professionals can help you achieve your financial goals and identify potential growth areas. With scalable pricing and the ability to outsource or co-source services, we offer flexibility and affordability for businesses of any size.
Through our collaboration, you can trust that your financial analysis will be accurate and aligned with your company’s overall strategic objectives. Contact us today to learn more about how we can help you meet your business goals.
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