
Financial Planning & Analysis (“FP&A”) is a critical function within a company’s finance department, focusing on budgeting, forecasting, and financial performance analysis. The primary objective of FP&A is to provide senior management with detailed forecasts of the company’s profit and loss and operating performance for the upcoming quarters and years. These forecasts are essential for assessing the effectiveness of strategic plans and investments, ensuring the company stays aligned with its long-term objectives. Additionally, they facilitate clear communication with external stakeholders, including investors and board members, providing a transparent view of the company’s financial health and outlook.
FP&A Excel-Based Package for the Investment Management Industry
Recently, we developed an Excel-based reporting package for one of our clients in the investment management industry. The reporting package calculations and outputs automatically update after updating historical financial data from trial balances and budget details for each entity. The solution includes EBITDA normalization items and inter-company eliminations, and it allows for adding more entities. The pack also generates effective and visually appealing reports on a consolidated basis and by entity (featuring the appropriate logos for the respective entities), that can easily be used in board reporting decks.
We developed a comprehensive reporting package tailored to the client’s needs, covering:
- 8 Years of Forecasts: Allowing for long-term financial planning.
- 16 Individual Entities: Providing a detailed breakdown of each entity’s financial performance.
- 5 Different Consolidated Reports: Offering flexibility to view various consolidated scenarios.
- Each entity was given its own worksheet for updating financials and budgets. The reporting package was designed to accommodate different fiscal year-end dates seamlessly, ensuring accurate reporting regardless of the selected date.
Schematic Overview of the FP&A Package
- User Input Section:
Includes trial balances, budgets, EBITDA normalization, and intercompany eliminations. - Consolidated Section:
Main calculations focused on standardizing and consolidating all inputs. - Output Section:
- Dashboard: Provides charts and trend analysis.
- Variance Analysis: Monthly, quarterly, and annual variance for income statement and balance sheet.
- Six Financial Statement Reports:
- Monthly Income Statement
- Year-to-Date Statement
- Trailing 12-Month Income Statement
- Balance Sheet
- Statement of Cash Flows
- Additional Metrics for Trailing 12-Month Analysis
Exhibit 1: Schematic Flow of the FP&A Reporting System
Key Features of the Reporting Package
- Automated Inputs and Updates:
Users can seamlessly update actual inputs for different entities by importing Trial Balance reports from their accounting system, as well as budget inputs and other key metrics such as EBITDA normalization, inter-company eliminations, exchange rates, and ownership schedules. The package is designed for ease of use, enabling automatic updates and adjustments across reports. - Main Outputs
- Dashboard:
The dashboard provides a visual representation of key financial metrics, including revenue, COGS, net working capital (NWC), cash flow, and loan covenants. Users can select specific dates and entities, and the dashboard will automatically update all charts and data accordingly. - Variance Analysis:
The variance analysis is used to identify areas of improvement. It compares actual financial performance against historical results and budgeted expectations, providing valuable insights into financial trends and discrepancies.- Income Statement: Offers variance analysis for the prior year comparing the current year, as well as the current year to the budget on a monthly, quarterly, and annual basis.
- Balance Sheet: Includes variance analysis comparing the prior year to the current year.
- Financial Statement Reports:
Integrated macros in the FS Reports tab allow for the insertion of entity-specific logos, making it convenient to produce tailored financial reports on a single sheet.
- Dashboard:
Customization and Flexibility
This package allows for comprehensive customization to tailor reports and data inputs according to specific business needs:
- Entity Addition: Users can add new entities and select currency as needed. The package adjusts automatically to accommodate these changes without disruption, ensuring consistency across all financial reports.
- Ownership Schedule: Users can modify the ownership schedule for each entity, reflecting changes in ownership structure. This feature also allows to set up ownership schedules for newly added entities, ensuring accurate representation of ownership percentages across all reports.
- Matrix for Loan Covenants: For entities with loans, users can update the matrix thresholds, principal, and interest payments. This feature allows for easy comparison of current loan ratios with predefined thresholds, such as Net Debt to EBITDA and Fixed Charge Coverage Ratio (FCCR), ensuring that the company remains compliant with loan covenants and can easily track financial obligations.
Conclusion
The FP&A reporting package we developed is a user-friendly, automated financial reporting tool designed for regular use by management. By providing detailed dashboards, variance analysis, and financial statement reports, it offers valuable insights for strategic decision-making, as well as reducing the time finance team spend on updating their monthly reporting and allowing them to spend more time on the FP&A analysis instead. This package exemplifies how FP&A tools can streamline financial processes, enhance transparency, and support informed business growth.