Until recently, many startup founders have viewed formal Financial Planning & Analysis (FP&A) as a function reserved for much larger companies. That view has shifted in recent years, as startups have recognized that Fractional FP&A provides valuable benefits to companies of all sizes. In fact, venture-backed startups are usually poised to receive enormous value from FP&A since critical decisions made early in a company’s growth have a major impact on the trajectory and ultimate outcome of the company. Founders can often benefit from stand-alone FP&A support before they are ready to engage a CFO.
As Fractional FP&A has caught on among Burkland clients and other fast-growing startups, we’ve been receiving questions about how the role is similar to, and different from, the Fractional CFO role at a startup. While there is often overlap between CFO and FP&A roles and responsibilities, there are also important differences.
Strategic Financial Oversight vs. Data-Driven Decision Support
CFO = Strategic Financial Oversight
The CFO is at the helm of a company’s finance department, providing strategic financial oversight to the entire organization. For startups, this translates to responsibilities including strategic planning, expansions, pivots, fundraising, and M&As. The CFO also manages the finance team, including accountants, controllers, tax professionals, and FP&A professionals.
Key CFO responsibilities at startups:
- Strategic planning
- Financial impact of expansions and pivots
- Process improvements
- Cash runway management
- Financial modeling (and Revenue modeling)
- Budgeting and forecasting
- Cap table planning and management
- Fundraising support (preparing for next funding round)
- Preparing for mergers and acquisitions
- Board support
Not sure if your startup is ready to hire a CFO? See Is My Startup Ready for a Fractional CFO?
FP&A = Data-Driven Decision Support
FP&A, on the other hand, provides decision support across the startup. FP&A’s role includes data mining, data modeling, data analysis, forecasting, and monitoring. FP&A typically reports to the CFO but assists all groups, including finance, operations, marketing, sales, and product development. FP&A should be closely involved in any strategic planning initiatives to ensure the best data is leveraged and the best decisions are made.
Key FP&A responsibilities at startups:
- Data mining and modeling
- Data analysis
- Real-time analytics and dashboarding
- Financial modeling and scenario simulation
- Financial forecasting
- Monitoring and optimization (financial and non-financial data)
- Decision support
For a few examples of specific use cases of FP&A for startups, see How FP&A Helps Startups Leverage Real-Time Data to Scale Smarter.
FP&A can assist your Management Team as a stand-alone service or in support of your fractional CFO. If your startup isn’t ready to invest in a fractional CFO, FP&A can bridge the gap with solid financial modeling and real-time analytics. If you’re already working with a fractional CFO, FP&A introduces a powerful new layer of decision support. FP&A can also provide a cost-effective support resource to free up your CFO’s time for analysis, fundraising, process improvements, board reporting, and other strategic initiatives at your startup.
Fractional FP&A gives your startup extra agility to scale faster and smarter by leveraging your company’s data for decision-making, including data hidden beneath the surface. Learn more about Burkland’s FP&A for startups, and contact us for details.