Breaking down silos: How xP&A and Consolidation & Financial Planning drive connected finance

In the early days of FP&A, many roles felt more like Financial Planning & Reporting. Professionals spent many months building a financial plan, then spent much of the rest of the year reporting on what happened each month. Today, the role has evolved into a value-creation function critical to ensuring company-wide planning (xP&A) is aligned with Consolidation and Financial Planning. Today, just planning finances is not enough; companies need to ensure that financial and operational data are connected across the organization and that data silos are broken down. This requires a deep connection between finance and the business. This requires connecting people, processes, and technology, and a strong xP&A platform makes these connections easier.

Understanding the power of integration

Extended Planning & Analysis extends far beyond traditional siloed FP&A. XP&A integrates planning across all business functions to ensure alignment among financial, operational, and strategic targets.

(CFP) Consolidation and Financial Planning serves as the foundation of financials and encompasses the consolidation of financial statements (actuals), budgeting, and forecasting. Every Finance department needs CFP, but integrating CFP with xP&A is necessary in today’s fast-changing world. CFP on its own is not enough. When these two things are not integrated properly, you end up with the following happening:

• I do not recognize that number; that number, finance made it up without asking me
• The quota in the sales plan does not align with the financial sales targets
• How did you calculate that number, as we have a different number
• We have a budget for travel, I had no Idea I have just been spending whatever we needed to get the job done, where do I see my numbers

 

When you hear these types of comments being made in the business, you can be confident that your FP&A department is not properly working with the business to ensure integrated planning is occurring.

 

The synergy advantage

The benefits are fully realized when xP&A and CFP work together, moving FP&A from reactive reporting to proactive strategic enablement. At the heart of the synergy lies trusted business partners working together to achieve a shared goal. For this to happen, a company needs a unified data model.

This approach ensures absolute consistency between actuals from CFP and plans or forecasts from xP&A. Finance teams no longer waste time reconciling disparate data sources or questioning which numbers to trust. Instead, they operate from a single source of truth that accelerates decision-making and enhances confidence in financial projections.

Cross-functional collaboration flourishes in this integrated environment. Finance teams can seamlessly align with operational units using shared data and assumptions. When sales updates their forecasts, the impact ripples through to HR capacity planning and operations scheduling, all while maintaining financial governance and control. This connected approach eliminates the traditional friction between departments, fostering a culture of transparency and accountability.

 

Transforming planning through real-time insights

Several benefits are gained from aligning xP&A and CFP and working from a unified data model. One of the main benefits is enhanced scenario planning and what-if capabilities. Building scenarios is a lot of work, and often they are done as part of budgeting with a low, medium, and high scenario, and then forgotten about. This falls far short of what scenario planning should be, and of the benefits a company gains from building scenarios that are aligned throughout the business. The reality is that markets change fast, recessions, black swans, and disruptive technology are on the horizon, and building scenarios for these different situations and a plan to support them better prepares us as an organization. These scenario plans should be driver-based, with key operational drivers. This makes it easier for everyone to align on plans when the time comes to implement a different scenario due to changing market conditions.

What-if capabilities are also enhanced when you are working from a unified platform. Building what-if scenarios focused on operational metrics and integrating and updating them with real-time operational and financial data each month, without having to pull from 7 sources or spend half a day updating a spreadsheet, is a real win.

In addition to enhancing scenarios and what-if analysis, you will see an improved monthly close-to-plan cycle. One of the long polls for many companies in updating the forecast each month is the time required to close the books and get the data. With xP&A and CFP working together, this feedback loop shortens significantly, enabling organizations to adjust plans based on actual performance almost immediately. This flexibility and agility become invaluable in volatile markets where speed of response can be the difference between success and failure.

 

Balancing compliance with agility

The regulatory landscape today is extremely challenging for companies to navigate, and as companies become more global, the complexity and need for agility to manage the regulatory environment become even more important. I have seen firsthand what happens when regulations change and a company lacks agility, and the consequences can be very costly. One of the benefits of having modern xP&A and CFP is that they can help you manage this world. CFP provides audit-proof consolidation that satisfies regulatory requirements and ensures financial close and reporting accuracy. This combination offers agility and flexibility in your planning process while enabling you to manage the complex financial compliance landscape companies face.

Moving forward: Connecting and automating your planning

In today’s fast-moving world, it is more important than ever that planning is tightly integrated between finances and operations. This is becoming increasingly difficult to manage with manual processes and spreadsheets. Organizations not only need to embrace process integration but also embrace automation and technology. An xP&A platform with CFP enables automated financial consolidation, integrated planning, variance analysis, and the benefits of predictive forecasting algorithms. In today’s world, for finance to be strategic, they need to spend less time manipulating data and more time analyzing it strategically.

Achieving fully integrated company-wide planning with financial results requires rethinking of processes and leveraging the right technology, but the benefits are really worth it. Research shows that companies with best-in-class FP&A staff have higher growth rates and profit margins than those without it. It is a great world when the business and FP&A can sit in a room together, analyze the data, update the plans, and feel confident they are aligned and moving the business forward. The goal of an excellent FP&A department is to help the business make better, faster decisions. Achieving this requires great people and processes, but without the right technology, it is a slog. Implementing Extended Planning & Analysis across the org makes it easier to break down silos, unify data, and ensure the company is all planning and moving in the right direction together. 

We live in a time where data-driven decision-making is critical. It is more important than ever to have a connected, unified operational and financial planning and reporting foundation. Without it FP&A departments will struggled to keep up with the demand placed on them by the business. By breaking down silos, unifying data models, and enabling real-time insights, this integrated approach empowers organizations to navigate uncertainty with confidence.