Corporate Finance Career Path #1: Financial Planning & Analysis (FP&A)

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What is FP&A?

FP&A, or Financial Planning & Analysis, is often referred to as Management Accounting. This critical department oversees the company’s Profit & Loss Statement (P&L) and forecasts the all-important “bottom line”: Net Income.

Role and Responsibilities

If you work in FP&A, your primary responsibility is to provide the CFO with accurate projections of the company’s financial performance. This includes:

  • Net Sales Projections: Estimating whether sales will grow faster or slower than expected.
  • Expense Analysis: Monitoring if the increase in Cost of Goods Sold (COGS) or Sales & Marketing expenses aligns with revenue growth.
  • One-Time Expenses: Identifying potential one-time expenses that could impact the bottom line.

FP&A professionals set revenue and expense targets for operational departments like Sales and Production and track progress toward these goals. Key tasks involve data consolidation and variance analysis to determine what went right or wrong in the previous quarter. Ad hoc reports on metrics such as sales volume and employee compensation expenses compared to projections are also common.

Organization

The FP&A team typically consists of three or four Analysts led by a Senior Analyst, each focused on a specific product. The Senior Analyst reports to the FP&A Manager, who in turn reports directly to the CFO.

Lifestyle

FP&A professionals usually work around 60 hours per week, with weekends off. However, during quarter-end or year-end closes and planning sessions, the workload can approach investment banking hours, with extended workdays and possibly working weekends.

Salary and Compensation

Compensation in FP&A varies based on the company’s size and the scale of the P&L. Here's a breakdown of typical salaries at different levels:

  • Entry-Level Analyst: $70K USD base salary.
  • Senior Analyst: $100-130K USD base salary, with a potential 10% bonus.
  • FP&A Manager: $200K USD for smaller P&Ls (e.g., a national division); can reach a seven-figure salary for Global FP&A Managers.

Bonuses are closely tied to the company’s financial health and the accuracy of the manager's forecasts.

Reaching the Senior Analyst level generally takes 4-5 years, and another 4-5 years to become a local FP&A Manager. Progressing beyond this point can be challenging and depends heavily on the company’s growth and your performance.

By understanding the role and responsibilities within FP&A, you can better navigate your career path in corporate finance. Stay focused on developing your analytical skills, building experience, and demonstrating your ability to contribute to the company’s financial health and strategic planning.

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