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Although Financial Planning and Analysis (FP&A) may not be as widely recognized a role in Japan, the demand for FP&A expertise is rapidly rising, both domestically and internationally. This article delves into the crucial role FP&A plays in supporting management from financial and accounting perspectives. We will provide a comprehensive overview of the responsibilities, required skills, career paths, and potential salaries in FP&A.
What is FP&A? Why is its Demand on the Rise?
FP&A stands for "Financial Planning & Analysis." The position serves as a vital pillar in facilitating decision-making for management and business unit leaders through financial and accounting insights. Originating in the United States, FP&A has since found a foothold in numerous advanced European and U.S. companies. The demand for FP&A services is also on the rise in Japanese companies.
Within the realm of accounting, there are two primary areas: financial accounting and management accounting. Financial accounting revolves around legally mandated reporting, aimed at providing stakeholders outside the company (e.g., investors and creditors) with a snapshot of the company's financial health. In contrast, management accounting focuses on supplying essential information for voluntary management decisions. FP&A predominantly operates in the arena of management accounting.
In international companies, FP&A typically operates under the guidance of the Chief Financial Officer (CFO), who wields significant influence over critical management decisions. Conversely, Japanese firms often have multiple managers overseeing business management and management accounting, with the CFO not directly involved in these areas. This can hinder the ability of FP&A to fulfill its original role as an active business partner in management.
However, with the implementation of the Corporate Governance Code by the Ministry of Economy, Trade, and Industry, an increasing number of Japanese companies are now recognizing the crucial role FP&A can play. This code provides principles for "corporate governance" applicable to companies listed on the Tokyo Stock Exchange. Though not legally binding, the code significantly impacts stock prices and financial results, as TSE publicly discloses violations. Companies are now required to convey their management policies and financial conditions in an accessible manner, and FP&A specialists are vital in this regard. FP&A is gaining prominence as a business partner that acts as an extension of management and supports corporate decision-making.
FP&A Roles and Responsibilities
In international companies, FP&A is often considered the second-closest position to management after executives. FP&A professionals are tasked with analyzing, managing, and formulating financial strategies for the entire company, as well as individual business units, products, or services. While the specific scope of responsibilities may vary depending on the organizational structure, the core role remains consistent: providing the necessary financial and accounting analysis and recommendations to support management and business unit decisions in strategy formulation and execution.
Key responsibilities of FP&A include:
- Business Management and Financial Analysis:
FP&A serves as a financial expert, collecting, analyzing, and forecasting data essential for developing medium and long-term financial plans and offering informed advice on management policies. While FP&A does not make final decisions, it significantly influences management's choices.
- Implementation of Management Accounting:
FP&A specializes in management accounting, providing vital accounting information to help management and business units comprehend the current situation and ensure that plans are executed. FP&A also analyzes Key Performance Indicators (KPIs) and Key Goal Indicators (KGIs) to address management issues.
- Revenue and Pricing Models:
FP&A is responsible for building revenue and pricing models, forecasting and managing sales and costs, and constructing profit models from a medium to long-term perspective, all aimed at enhancing profitability and optimizing cash flow.
As an integral part of management decision-making, FP&A is increasingly crucial for a company's growth and success.
FP&A salaries vary based on factors such as the role's scope, organizational structure, responsibilities, years of experience, and location. The latest salary trends can be found in Robert Half's comprehensive salary guide.
5 Essential Skills for FP&A
As FP&A continues to gain significance in corporate management and the Japanese job market, several essential skills are required for a successful career in this field:
- In-Depth Knowledge and Experience in Management Accounting:
A profound understanding of management accounting is essential for analyzing a company's management effectively and formulating appropriate strategies and decisions. Candidates should be proficient in interpreting all aspects of financial statements and evaluating factors influencing the company.
- Presentation Skills:
FP&A professionals must go beyond data presentation and excel in guiding management and business development decisions using data. Their ability to strengthen decision-making through compelling presentations, characterized by a coherent structure, logical flow, clear vocal communication, and effective body language, is an indispensable part of their skill set.
- Communication Skills:
Effective communication, involving constructive discussions and collaboration with colleagues, is pivotal for success in FP&A. Using appropriate language, content, and explanations tailored to the recipient's comprehension level, along with accurate information delivery, can foster smoother working relationships.
- Knowledge and Skills in Information Technology:
In today's digital landscape, FP&A relies on the latest technology for data aggregation and analysis. Being proficient in IT tools for data analysis and management, and staying updated with technological advancements, is essential for efficient data processing.
- Business English Skills:
FP&A roles in foreign-affiliated companies often report to CFOs, offering valuable career development opportunities. Proficiency in advanced business English, coupled with knowledge of international accounting standards and US-GAAP, can broaden career prospects in a global context.
3 Qualifications to Advance Your FP&A Career
To enhance your FP&A expertise and solidify your career path, consider obtaining these certifications:
- MBA (Master of Business Administration):
Pursuing an MBA equips you with broad management knowledge and practical skills. The experience of studying business administration during an MBA program can enhance your ability to excel in FP&A, especially if pursued abroad, offering exposure to international diversity and valuable professional connections.
- USCPA (U.S. Certified Public Accountant):
USCPA is an internationally recognized certification that goes beyond accounting knowledge to encompass economics and information technology concepts. The exam, conducted in English, also helps demonstrate proficiency in the language, a valuable asset for FP&A roles in foreign-affiliated companies.
- CPA (Certified Public Accountant):
As one of the three major national certifications in Japan, CPA designation denotes expertise in accounting and auditing, opening doors to diverse roles in finance, accounting, and consulting. Becoming a certified public accountant requires passing the examination, gaining practical experience, and undergoing practical training.
These certifications can broaden your career prospects in the FP&A field.
Expanding FP&A Career Paths
Today, career paths in finance have evolved significantly. While the conventional trajectory involved gaining experience in accounting and FP&A before aiming for a finance leadership role, new opportunities have emerged. Individuals from diverse financial backgrounds, including consulting firms and investment banks, are now transitioning into FP&A roles within operating companies.
Additionally, professionals in finance divisions are increasingly exploring roles in marketing or strategy, leveraging internal open recruitment systems. The integration of Japanese subsidiaries into global organizations has also elevated the importance of finance divisions, not just in Japan but globally.
The demand for FP&A professionals is expected to continue growing in the foreseeable future. Robert Half has a specialized team of recruiters dedicated to finance and accounting positions. If you’re thinking about a career change within finance and accounting, please contact us.