What is the difference between Accounting and Financial Planning & Analysis?
Accounting and FP&A are two sides of the same coin. Accounting focuses on the “what” and FP&A focuses on the “why”. While they both work in the same department within an organisation, the purpose of their work is very different. The FP&A Analyst is investigating any change in the numbers, while accounting is primarily responsible for processing, recording and auditing the accuracy of financial transactions. FP&A professionals find the story hidden in the financial data to provide upper-level management information needed to make strategic, operational, and tactical decisions.
Budgeting? What is it and why is it important?
The budget is an estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals.
Knowing where the budget stands, provides companies with up the ability to plan the hiring of new staff, investment in new product lines and setting earning goals in line with the organisation’s corporate financial objectives. Other benefits include:
- The potential to attract investors
- The ability to set sales goals
- The chance to open lines of credit
- The ability to make decisions about salaries, bonuses, benefits and overhead operating expenses
- Easier tax preparation
What is the relevance of the forecast?
Forecasting is important because businesses thrive on being prepared. If you are a business leader, you need to know as accurately as possible what your outlook will be in the future.
The most valuable forecasts do more than that, allowing a proactive business owner to:
- Identify risks and take pre-emptive action
- Spot opportunities and take positive action
- Plan and control cash flow, breeding a sense of confidence about balancing spending with revenues
- Manage sales and adjust sales targets
- Formulate new marketing strategies and tactics
- Fulfil due diligence requirements for potential lenders or investors
For many companies planning and reporting is an arduous task – departments often undertake this in silos, working on a plethora of spreadsheets with unreliable data, that often yields inconsistent results. With Oracle NetSuite NSPB, financial, contractual, sales and operational planning can be completed with relative ease. This is such an important business function, yet because it is so time-consuming it’s normal for companies to plan budgets at the beginning of the year as a one-off task – with NSPB it can be an ongoing all-year-round exercise.
Advantages of using NetSuite Planning & Budgeting (NSPB):
- Fewer errors – data is more reliable improving forecast accuracy
- Time-saving – planning and reporting is much faster meaning you can focus on growing your business
- Operational / financial business decisions can be made more quickly
- Low cost and quick to implement
- It can be customised to meet specific business requirements
- Cloud-based – you will always have the latest software version