5 Key Steps in Financial Planning and Analysis (FP&A) Process

Gain a deeper understanding of FP&A’s essential phases, from data analysis to forecasting

Manasa Kumar

Content Marketing Lead


  • Gathering and Validating Financial Data: Collaborate with various departments to gather operational and strategic data, laying the foundation for analysis and decision-making

  • Analysis and Insights: Utilize analytical tools like Bunker to turn raw data into meaningful insights, understanding the ‘why’ behind the numbers for strategic decision-making

  • Forecasting and Communicating: Leverage historical data, market knowledge, and trends to compile comprehensive financial forecasts. Effectively communicate insights to stakeholders using reports and interactive dashboards for informed strategic decisions and financial planning


FP&A is the financial navigator of an organisation. It transforms raw data into strategic insights, shaping the company’s financial future and enabling leaders to make decisions rooted in data-driven clarity. There are generally five steps in the FP&A process and each can be broken down into several smaller tasks. Let’s dive in:

1. Gathering and Validating Financial Data

All appropriate financial data must be gathered effectively for FP&A to function, as it is the foundation for analysis, forecasting, and decision-making. This data could range from operational data such as:

  • Sales volumes
  • Pricing data
  • Production costs
  • Staffing costs


To strategic data like:


  • Planned marketing initiatives
  • Investments in infrastructure
  • New product launches


This phase requires collaboration with different departments across the organisation. The finance department often works closely with sales teams to evaluate sales forecasts, the manufacturing or operations team to gather data on production costs, and the marketing team for data linked to promotional expenses. 


Others, like the supply chain department or human resources, can provide valuable insights into cost structures.


After the data has been compiled, it is critical to validate the accuracy of the information. This involves several layers of checks and balances—cross-verifying data against other sources, reconciling numbers, and checking for any anomalies or outliers that might suggest a data entry error. 


For example, if the sales data from the CRM doesn’t match the numbers from the sales team, it would require investigation to identify and rectify the inconsistency. This ensures that all subsequent steps in the FP&A process are based on accurate and reliable data.

2. Analysis and Insights

Once the data has been gathered and validated, the finance team dives into in-depth analysis, turning those raw numbers into meaningful insights.

By leveraging analytical tools like Bunker, the data can be sorted, segmented, and analysed from different angles. 


Crucially, this process is not just about reporting what happened but understanding why it happened. Without speed, accuracy, and depth to the analysis, insights may still be derived, but they will lack the implications and recommendations that truly aid strategic decision-making.

Analysing Historical Data

Reviewing historical data lays the groundwork for future strategy. The team evaluates previous years’ financials to identify recurring patterns, trends, or seasonal variances.


These will include:


  • Performance against budget
  • Profitability
  • Sales trends
  • Operational efficiency
  • Cash flow


For instance, if data shows that sales for a retail company have consistently spiked in the fourth quarter over the past five years, a similar spike would be factored into the forecast for the next year.

Compiling Forecasts

Using the insight from historical data, coupled with market knowledge, strategic plans, and economic trends, the finance team begins creating comprehensive financial forecasts.


They help rationalise the viability of strategic choices like entering a new market, launching a new product, or undertaking a significant investment.

3. Identifying Variances and Trends

A critical part of a finance team’s responsibilities is to analyse the differences between forecasted/budgeted figures and actual results, and determine why they were misaligned. 

Variance Analysis

In this step, budgeted output is compared with the actual outcome. If the actual sales revenue is significantly lower or higher than what was budgeted, the finance team seeks to understand the causes for discrepancies such as:


  • Market changes
  • Pricing variations
  • Sales performance
  • Inaccurate assumptions
  • Unexpected expenses
  • Changing capital expenditure
  • External factors (political instability, natural disaster, etc.)


This analysis helps identify areas where a company should focus on to improve financial performance and methods to improve forecast accuracy.


Trend Identification

The CFO closely observes the financial data to identify emerging trends or patterns. If a company consistently exceeds its sales projections, it speaks to a trend of growth that would be factored into future forecasts. Spotting these trends is crucial for ensuring future plans are based on the most current and relevant data.

4. Developing Budgeting and Planning Strategies

Turning forecasts and insights into actionable strategies is at the core of FP&A.

Budget Formulation

Using forecasts as a base and input from different departments, the team compiles the budget for the upcoming period. The budget estimates expected revenue, plans for every significant expense area, and aims to outline a financial plan that supports strategic business goals. 

Strategic Planning

CFOs are responsible for long-term financial planning, which keeps the company’s financial direction aligned with its strategic objectives. This planning prepares the company for future financial scenarios and aids in making informed strategic decisions.

5. Communicating Financial Insights to Stakeholders

Transforming financial data into actionable insights is increasingly valuable when it can be effectively communicated to stakeholders. 

CFOs and other financial roles are being given more responsibility, which leads to more pressure to deliver actionable advice. 

For instance, CFOs are especially under pressure to create the financial narrative of the company during fundraising. Presenting this story can be a challenge if they rely on manual processes to collect the data and conduct analyses. 


Dashboards within a financial analytics tool like Bunker help provide vendor and transaction-level drill-downs without painful and time-consuming extractions from the accounting software. In addition, Bunker’s monthly report summarises key data from the general ledger to give you actionable insights, just days after your close. These data drill-downs can help you form the financial narrative of a company.


An Ernst & Young survey found that “inspirational leader and strong communicator” is now the second-highest attribute associated with private company CFOs, showing how important translating financial data has become. 


Tools that can help them tell that story effectively raise a CFO’s value, allowing them to seem more competent to finance teams and major stakeholders.

Report Preparation

The finance team meticulously prepares reports consolidating key financial information, analyses, forecasts, and insights. These reports often include:


  • P&L projections
  • Cash flow statements
  • Department-wise budget utilisation


Visual elements like graphs, charts, and heat maps can convey the message more effectively and efficiently. 


With a financial analytics tool like Bunker, you can turn thousands of rows of overlooked accounting data into deep, fast and actionable insights. An in-built Profit and Loss Dashboard shows actuals vs variances month-on-month and waterfall charts that visually depict increase or decrease in expenses. 

Informing Stakeholders

Then comes the crucial task of communicating these insights to decision-makers in a clear and understandable format. This responsibility primarily falls on the CFO of the company. 


This could be done through presentations, meetings, or interactive dashboards, and it inherently involves translating complex financial jargon into comprehensible information. 


With financial analytics software like Bunker, those valuable insights can be generated through interactive dashboards that show trends and variances. You can also find vendor and transaction-level drill downs without painful and time-consuming extractions from the accounting software.


With this level of deep insight, you can effectively guide strategic decisions and shape the company’s financial future.


Get actionable insights, delivered monthly.

Ready to deep dive?

Bunker is currently offering early access to select companies. If you’re keen, register your interest.

Scan the code