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The Importance of FP&A and How Centri Can Help

Introduction

Financial Planning and Analysis (FP&A) is a crucial aspect of any business, providing insights into a company’s financial health and helping to shape its strategic direction. It involves budgeting, forecasting, and analyzing a company’s financial data to provide useful information for decision-making.

FP&A plays a pivotal role in a company’s success. It provides a clear view of the company’s financial status, enabling leaders to make informed decisions. It helps in identifying trends within KPIs, tracking performance against goals, and predicting future outcomes. By doing so, strong FP&A helps companies to stay competitive, profitable, and sustainable in the long run.

Cash flow forecasting, especially with 13-week and 26-week projections, is a key component of FP&A for businesses. It helps anticipate financial needs, manage liquidity, and helps ensure proper decision making for sustained operations. The shorter timeframes allow for more accurate predictions, aiding in timely adjustments and risk mitigation.

FP&A has applications across many different use cases. The following examples are common areas where CFOs demand strong FP&A for successful business outcomes

Capital Planning

Capital planning is a critical component of a company’s strategic planning process. It involves deciding how to allocate resources for future growth and profitability. It also involves an element of tracking progress.

How Centri can help

Centri can provide guidance in this area, producing a model that helps businesses evaluate various capital structures, assess investment opportunities under different scenarios, and manage risks. Our team can assist in developing a robust capital plan that aligns with the company’s strategic objectives and financial capabilities. Centri can provide a model with a robust budget vs. actual comparison and a succinct executive summary dashboard.

Corporate Development

Corporate development involves the planning and execution of strategies to meet organizational objectives. This could include mergers and acquisitions (M&A), divestitures/carve outs, joint ventures, and other strategic partnerships.

How Centri can help

Centri can play a vital role in this process. Our team can provide valuable insights into market trends, identify potential M&A targets, and produce financial models to evaluate acquisition targets. Financial models in the M&A space can be used to evaluate accretion (or dilution), estimate the benefits of potential synergies, and provide insight into appropriate offer prices and structure. Centri’s expertise in financial modeling can help ensure that the corporate development activities align with the company’s overall strategy and maximize shareholder value.

Project Finance

Project finance is a long-term financing method primarily used for infrastructure and industrial projects. It relies on the project’s cash flow for repayment and the project’s assets as collateral. It often involves understanding the potential risk and return for multiple financial sponsors. Because it can involve multiple parties, there may be complex payment structures required to complete the deal.

How Centri can help

Centri can offer significant support in this area. We can provide a model that will aid in structuring the financing arrangement, assessing the project’s financial viability, and managing risks. The model will also calculate potential returns to the various stakeholders.

Conclusion

FP&A is a critical component of a company’s strategic long-term planning and decision making. Dynamic and flexible financial models help companies remain agile and proactive to changing market conditions to gain and maintain competitive advantages by making informed, quantitative decisions. By partnering with Centri, either to be the outsourced solution or an extension of your existing team, you gain an outside, unbiased perspective. Contact us to learn how we can set your company up for success.

Curtis Farrow

Partner | Private Equity & Venture Capital Practice Leader | CPA, ASA

Curtis is a Partner at Centri Business Consulting and the leader of the firm’s Private Equity & Venture Capital Practice. He has more than 11 years of experience and has supported many clients in achieving their growth initiatives in connection with M&A, capital raising, reorganizations, and carve-outs, as well as successful liquidity events for stakeholders via IPOs, de-SPACs, reverse mergers, and other M&A transactions. Curtis joined Centri in November 2019, where he combines his strong expertise in business and intangible valuation with his knowledge of accounting to identify, address, and resolve business issues for investors and entrepreneurs.. View Curtis Farrow's Full Bio

Mike Fazzolari

Director | MBA, FMVA, ABV

Mike is a Director at Centri Business Consulting. He has 15 years of professional experience, including valuation, investment banking, financial analysis, and project management, of which 10 years are related to valuation. View Mike Fazzolari's Full Bio