FP&A.
Financial planning and analysis — forecasting, budgeting, and turning numbers into decisions people can act on.
FP&A — financial planning and analysis — is the function that builds the forecast, runs the budget, and turns raw numbers into decisions people can act on. It sits between accounting (what happened) and strategy (what to do next), and the best teams sit unmistakably closer to the strategy end: forward-looking, driver-based, and continuous rather than an annual ritual that’s stale by Q2.
A forecast earns its keep when leadership trusts it enough to hire, spend, or pull back — which takes models built on a few real drivers, honest assumptions, and a narrative a non-finance leader will act on. Strategy of Finance looks at how modern FP&A teams build forecasts that hold up, models that scale, and analyses that actually change minds.
Essays 14
Outcomes are easy, enablers are hard — Srini Phatak on the Fortune-500 CFO job Podcast Summary Flip the equation — Rocky Lalvani on profit as the driver, not the residual Podcast Summary The synthesizer — Alex Small on strategy as connective tissue, not a function Podcast Summary IPO is an entry event, not an exit — Arvind Agarwal on the public-company CFO Podcast Summary The finance pyramid — David Yan on insights, not raw data Podcast Summary Finance is the heart, not the brake — Akshay Sarma on the lender CFO Podcast Summary Less close, more counsel — David Junius on the strategic CFO Podcast Summary Subtract the work — Arjun Mehta on the leader who eliminates Podcast Summary The pendulum — Mika Kasumov on strategic finance Podcast Summary System-driven, not people-dependent — Amit Kumar Podcast Summary The Conscious Keeper — Venkatesh Tarakkad Podcast Summary Change the tires of a fast-moving car — Jay Sahal Podcast Summary Reset 100, Part 3: Budgeting FP&A Reset 100, Part 2: Business Strategy Modern Finance Function
Episodes 3
EP 031 Srini Phatak Unilever EP 031 - How to Run a Fortune 500 Company with Srini Phatak, Deputy CFO of Unilever Jul 16, 2024 1 hr 30 min EP 021 Alex Small Central, Stripe EP 021 - Masterclass on Strategy with Alex Small, Head of Strategy & Operations, Central at Stripe Feb 24, 2024 1 hr 51 min EP 008 Mika Kasumov Abacus & Pencil EP 008 - Finance as a Growth Driver with Mika Kasumov Aug 5, 2023 50 min
Standards 12
Revenue types Every revenue line carries one of seven locked types. Only recurring subscription revenue becomes MRR; a type that cannot be determined is never guessed. Monthly recurring revenue MRR is the month-end recurring run rate of a resolved customer: a state, not a flow, held through qualifying pauses and distinct from recognized revenue. MRR Annual recurring revenue ARR is in-month MRR multiplied by twelve: a restatement of the current run rate, not a forecast, not trailing revenue, and not the value of the contract book. ARR The movement taxonomy Every month-over-month change in a customer’s MRR is exactly one of five movements, signed so that opening plus movements equals closing by construction. Pause, churn, and the reactivation window A billing gap within the reactivation window is a pause with MRR held; a longer gap is churn then reactivation; an open gap at the cutoff is right-censored. Net revenue retention NRR measures what a fixed set of customers is worth now versus then, expansion included and new customers excluded. Three variants defined, all three computed. NRR Gross revenue retention GRR measures the same fixed base as NRR with each customer capped at its starting revenue, so expansion cannot offset loss and the figure cannot exceed 100%. GRR Cohort retention A cohort is the set of customers whose first MRR month falls in a period. Each member’s base is its own joining month; each cell is measured at period end. Churn analytics Churn is recognized in the first zero-MRR month after a qualifying gap, reported four ways: logo and dollar rates, tenure at churn, seasonality, survival. Growth accounting Growth accounting splits each period’s MRR change into five movements and reports the quick ratio, gross additions over gross losses, with the mix by source. ACV and ARPA ARPA is total MRR over active customers. Because the average alone misleads, the standard reports the distribution: revenue by decile and counts by ACV band. Foreign exchange Flows convert at monthly-average rates for the month they occur. Rate-driven movements are tagged, sub-totalled in the bridge, and removed in constant currency.
Related questions
Reviewed- What is FP&A?
- Financial planning and analysis — the function that builds the forecast, runs the budget, and turns raw numbers into decisions people can act on. At its best it's forward-looking: less 'explain last month's variance,' more 'here's what the next two quarters likely hold and what we should do about it.' It sits between accounting (what happened) and strategy (what to do), and the good teams are unmistakably closer to the strategy end.
- What makes a forecast actually useful?
- It holds up, and it changes a decision. A useful forecast is built on a few real drivers rather than a hundred fragile line items, is honest about its assumptions, and gets revisited when reality diverges. The test isn't precision to the decimal — it's whether leadership trusts it enough to hire, spend, or pull back based on it. A model nobody acts on is a spreadsheet, not a forecast.
- How is modern FP&A different from traditional budgeting?
- Traditional budgeting is an annual ritual that's stale by Q2. Modern FP&A is continuous: rolling forecasts, driver-based models, and scenario planning that updates as the business moves. It's also closer to the operators — sitting with sales, product, and marketing to shape decisions early rather than scoring them after the fact. The shift is from an annual control exercise to an always-on decision tool.
- What skills matter most in FP&A today?
- Three: building models that someone other than the author can run and trust; translating numbers into a narrative a non-finance leader will act on; and knowing which drivers actually move the business so the model stays simple. Technical fluency in spreadsheets and SQL is table stakes. The differentiator is judgment about what to model and the communication to make it land.