This is the final installment of our four-part series on Why Outsource…? This article will look one of the outsourcing options available from Paro: financial planning and analysis (FP&A). As with the other services, there are some similarities in the reasons for outsourcing, but outsourced FP&A has its own traits and warrants its own article.

The Roles of FP&A

FP&A is crucial to every business’s future, as every company must understand where it came from, its current state and its most likely paths forward. FP&A analyzes all-important cash flow to ensure the company can continue on its current path, predicts the probable success of various paths or projects, and considers all the numerous variables that affect the company, like economic, market, and business conditions.

FP&A personnel build financial models and employ metrics to determine if the company’s state is positive or negative. Depending on that result, FP&A can then determine which projects are most likely to succeed, including expected values of investments in each project. Long, slow establishment in one market might be ideal, but for a company on less-than-ideal footing, focusing on short-term success in a critical market might be the only option.

FP&A helps management make informed decisions to safeguard the company’s survival, assets, and even its employees (since bankrupt companies cannot employ anyone). This decision-making usually stems from FP&A professionals’ interpretations of the data, translation into less technical terms and subsequent actions management then takes.

Why Maintain an FP&A Department

Some businesses, especially SMBs, might have strategic plans in place for expansion and don’t see the need for FP&A departments. However, the economic landscape is always changing, and businesses that fail to understand changes early and adapt will almost certainly struggle in the future. Keeping workers on the FP&A payroll will ensure the business will be aware of changes, react in an agile way to those changes, and generally shift its strategy according to the most up-to-date, relevant factors. Furthermore, cash flow problems are a major concern for businesses, because they need to constantly be monitored and safeguardedFP&A departments work to ensure no surprises arise from cash flow problems.

For businesses on the fence about creating an FP&A department at all, it is important to consider the complexity inherent in model building and the interpretation of the results. As businesses grow, financial complexity will rapidly multiply, and haphazardly making investments and financial decisions without the proper care can lead to cash flow problems and eventual bankruptcy.

Benefits of Outsourced FP&A Teams

The reasons for outsourcing are myriad, including previously gained expertise and the reduction of the financial burden stemming from full-time staff. Some software licensing may come along with the package, and industry best practices are likely to be passed on to the hiring company.


The strongest reason for outsourced FP&A likely rests in the expertise those professionals have collected. A highly qualified, experienced FP&A freelancer who has worked with many companies will understand which models and assumptions best fit the business or problem at hand. If none of those models or assumptions apply, they can use their honed intuition and past successes to build an entirely new model for your company.

The freelancer will consider past successes and failures when making decisions, benefiting the current company with what has previously worked best while filtering out approaches that have been proven failures. For freelancers that take on more than one project at a time, it might even mean concurrently running best practices across an entire industry, benefiting each customer by offering the strongest current understanding possible.


Technology is essential to modern business, and outsourced professionals will likely have their own technology for building models, calculating metrics and presenting the results. This could be as small as using open-source software, so the hiring company would not need to purchase expensive enterprise-level licenses. It could also be as big as being a member of a large outsourcing company that offers its freelancers access to the latest paid technology.

Moreover, computer programming and IT system knowledge has become essential for FP&A operations. For that reason, an outsourced FP&A professional could assist the growing SMB in implementing their own in-house systems. In-house systems give companies more control over their data, regardless of whether internal or external employees are using it.

Leaner In-House Staff

Due to the highly technical nature of FP&A, it is unlikely any single person in the organization can perform FP&A duties in addition to another central role. It may be possible to have a tiny team, with some people doubling as AP or AR staff and creative, management or other roles. However, the barrier to entry for FP&A is significantly higher due to the need for background knowledge, especially on the technical side (payroll may have higher background requirements for legal and taxation issues).

This is especially relevant to one-off projects and analyses. If a company wants to start a new project but isn’t convinced of its value compared with the investment, bringing in an outsourced FP&A team member is an excellent way to determine the what outcomes of that investment will likely be. There is no need to have a full-time staff member for a single one-time analysis. Outsourcing ensures that existing employees are not overwhelmed with a task that is outside their area of expertise.

Finally, a company may have an in-house CFO but the CFO is too busy to take on smaller tasks or projections. In that case, the CFO might need part-time assistance, another point where outsourcing makes sense: on-demand, one-off tasks that require less knowledge of the company but where existing employees lack experience and know-how.

The Takeaway

Unlike the other services in this series, FP&A has two timeframes: continuous and one-time. The others are all continuously needed, and FP&A can also be continuously needed for monitoring cash flows and, in bigger companies, for the high number of projects and forecasts. For seismic changes like M&A, or single project analyses like whether the investment to enter a certain market is worthwhile, a one-time use strategy is acceptable. Both ongoing and one-time projects can be outsourced, depending on your business need.

The size, position and strength of a company does not bar it from hiring freelancers, and indeed many companies outsource all kinds of traditional in-house services. The biggest to the smallest business can benefit from outsourced teams, including Paro’s professional outsourced FP&A services.