Restricted by low bandwidth and cost limitations, small businesses rarely have the luxury of dedicated FP&A personnel to drive forecasting and in-depth business analysis. Expanding your footprint, bringing in new investors or pricing your product line are elements that can’t be left to chance. As a business owner, how can you support your small business financial planning through the accounting resources that you have—or with flexible talent resourcing? 

Enterprise vs. Small Business Financial Planning

Though an FP&A function can deliver significant insights, the sophistication and granularity looks different at every business size. 

Large, mature operations employ dedicated FP&A departments that allow them to data mine and analyze data specific to certain departments or locations. These businesses mine data from CRMs, enterprise resource planning (ERP) systems and more. 

Small and midsize companies have these needs too, but they run tighter ships with leaner teams. Often, an accountant or financial controller dedicates a portion of their time to budgeting and modeling—at best. Having the capacity to perform financial analysis comes down to skill, bandwidth and the balance between prioritizing today’s needs with tomorrow’s opportunities.

FP&A vs. Accounting: Skill Differences & Overlaps

Accounting is focused on producing financial statements and making recommendations based on analysis of how cash is flowing in and out of the company. Financial planning and analysis often picks up where financial statements leave off, taking that historical activity and creating models or scenarios to predict performance, set targets or build business cases. While accountants may lack training in forecasting software and other specialized FP&A skills, there are many skills that can help bridge the gap and provide value for strategic decision making. 

As automation and technology eliminate repetitive tasks and transaction processing lift, accounting professionals are being called on to help with strategic decision making. What skills can they offer business leadership in this regard?

  • Technical acumen – With a deep understanding of data management and software, including ERP systems, accounting professionals are your first layer of support in compiling high-level or itemized information. 
  • Managerial reporting: Professionals with a managerial accounting background perform budget variance analysis to compare performance against expectations, which helps create more accurate models. This tells you your biggest risks and drivers to help make decisions around investments. In addition, cost accounting helps leadership understand its most profitable services and determine product or service pricing. 
  • Tax insights: CPAs with an understanding of tax code intricacies have a strong eye for detail and are well positioned to analyze details within financial statements to analyze how the company can allocate its resources to minimize tax liabilities. Their understanding of how the tax code can impact future investments is an invaluable form of small business financial planning. 
  • Up-to-date knowledge: Staying current with regulatory changes or industry trends is another way that accounting professionals provide insights for future decisions and inform budgets or future investments.
Accounting vs. FP&A

How to Build a Foundation for Small Business Financial Planning 

Those most nimble with numbers—your accountants—are an important asset to small business financial planning. They’re the closest to your everyday business and have the most interaction with your numbers. Leveraging accountants, bookkeepers or financial controllers can help you enhance decision-making abilities and build the foundation for a greater FP&A function once you have the budget or bandwidth.

What does your business need to do now to ensure that future financial planning isn’t dead in the water?

  1. Improve the speed of your month-end close so that you can make faster decisions and work with financial data before it becomes irrelevant. The same goes for accuracy, as you’ll want your data to truly reflect reality. 
  2. Shore up your data management so that as your business grows and financial data increases, you can spend less time pulling data and more time analyzing it. Assess your tech stack to make sure data is easily accessible and not overly siloed. This practice will be invaluable for businesses that grow large enough to have separate FP&A and accounting functions collaborating together.
  3. Ensure communication between you and your team is consistent and that communication makes sense to you and your stakeholders. The language that your team uses can help you or board members understand the financial implications of certain decisions. 
  4. Take advantage of the dual operational and strategic expertise of a financial controller that can manage accounting and build cash flow forecasts and budgets. Focus your initial forecasts on the most important piece of your business—cash—before adding further complexity.

Play Into the Strengths of Your Team with the Appropriate Resource Model

If your accountants are at max capacity in their current roles, forcing new demands upon them is not optimal. If they’re fully engaged in their role, then fractional FP&A expertise is an optimal way to support strategic decision making without taking away from the strengths of your current talent. 

On the other hand, if you have an accountant or two who enjoy dissecting data points and assessing business needs, then evolving their roles can increase the competitiveness of your business as accounting and finance move closer to strategy. You can take transactional tasks off of their plates by augmenting your team with a fractional professional. 

Although early-stage businesses must stay lean—even foregoing CFO leadership until they reach substantial revenue—they can still support financial planning and strategic analysis through value from their accounting function. 

Is your business ready to enhance its analytical capabilities and move forward more confidently? Our part-time, vetted finance and accounting experts can free up capacity for your team to take on a strategic role or use their skills to initiate your FP&A capabilities. Our community of experts includes fractional talent with the skills your business needs—whether an FP&A specialist or accounting personnel with analytical skills—to guide your team.