What Is Business Partnering?

Business partnering is the collaboration between finance and other business units to enhance decision-making and optimize resource allocation. It enables FP&A to leverage its financial analysis, reporting and forecasting skills to drive the business forward.

FP&A builds alignment across strategy and operations by seeding the strategic plan into the annual operating plan and managerial ownership levels. By objectively assessing the financial implications of proposed actions, FP&A ensures decisions are well-informed and strategically sound, playing an influential role in the company's overall performance and success.

PART 1

Why Is Business Partnering Important?

Business partnering is important because it is how FP&A delivers its financial acumen to the business. Through collaboration, FP&A serves as an impartial advisor, providing objective insights, challenging decisions and ensuring good metrics are delivered to the business.

For instance, FP&A translates complex financial and non-financial data into readily understood concepts and outcomes. By making intricate concepts accessible and actionable for other departments, the organization can set realistic targets and address business problems as they arise, maintaining strategic alignment and accountability.

Examples include translating cash flow to earnings, interpreting FX rates or inflation onto the financial statements, or delivering profit and loss statements to responsible managers.

Finance Business Partnering

PART 2

Finance Business Partnering Activities

In FP&A, business partnering consists of three primary activities: integrated planning, performance and management reporting, and decision support.

Integrated Planning

Collaborative, integrated planning across the entire enterprise creates vertical alignment from the board and senior management through P&L owners, and horizontal alignment connects adjacent businesses and processes. When financial and operational planning cycles are in sync, capital and operational expenses are linked in the financial outlook.

A leading practice is for the business to own the forecast/budget and for FP&A to facilitate the process through formal project/process methodologies, coordinated assumptions and calculations, and providing effective challenges back to the business.

Performance and Management Reporting

When the CFO's perspective is considered in business performance management, an organization maintains a forward-looking view of what drives enterprise value. Management reporting is tied to KPIs and operational processes, and market benchmarks and references are applied as appropriate.

A leading reporting practice is to develop reports in collaboration with the intended audience to tailor the information to their needs. The reports should be concise and make key insights accessible to the audience.

A leading practice for performance metrics is to use a structured, holistic framework to evaluate the enterprise’s financial and operational performance in a consistent manner. Finance and partners should trust the data without needing to relitigate the creation and use of KPIs, and the confirmed metrics should be available and accessible.

Decision Support

Decisions should align with business objectives and decision-making frameworks. When financial analysis is done in the context of the business, finance and the business work together to build business cases. Considering investments as part of a company portfolio diversifies risk and needs across the enterprise.

Effective Business Partner

PART 3

How Do You Become an Effective Business Partner?

When business partnering is successful, FP&A is considered a highly credible and trusted advisor that is sought out for input and collaboration. FP&A’s contributions are based on a customer-centric view of the business and create alignment across the enterprise.

To become an effective business partner, you must take three critical steps: build collaborative relationships, create the right organizational structure, and deploy technology that enables business partnering.

Build collaborative relationships.

Building collaborative relationships requires knowing the business and the people and delivering value.

Know the Business

Knowing the business involves understanding the entire value chain from inputs through to how you serve the customer; your business partner is a part of that chain. Visiting the frontlines is the fastest and most effective way to learn how things actually work. Be curious and open-minded. Seek out the people and things you don’t know. Recognize and respect institutional knowledge.

Know the People

Knowing the people you’re working with means listening to their challenges and concerns, understanding what’s important to them, and relaying relevant information without using jargon.

Instead of only interacting with someone when you need something, build the groundwork for partnership through a series of interactions. Share information and develop the relationship through trust and engagement.

You will learn more in informal settings than in formal ones, as people are less inclined to speak openly in front of their boss. To access informal settings, you will need to gain (and maintain) the trust and confidence of the business managers.

One way to achieve this is to set up an FP&A contact for the business unit, either embedded within or assigned within the FP&A team. This allows FP&A and the business unit to work closely, building trust.

Deliver Value

Delivering value is essential to building your credibility. Whether it’s a fresh perspective, insight or actionable information, bring something to the table that the group does not already have.

To do this, you must first understand finance's unique input. This includes things like an ability to think through an uncertain future, methods for quantifying decisions and strong analytical frameworks.

Make sure what you say is accurate, honest and relevant. Timeliness is also important, so do not let requests linger in a queue.

Create the right organizational structure.

A mission statement for your FP&A team is the starting point for creating the right organizational structure. It lets people know what they can expect from you and what you’ll deliver. It establishes the mindset and aligns with other parts of finance.

The CFO retains the role of the steward of a company’s capital and separates that responsibility among different departments. The responsibility of capital control remains with accounting/controllership, capital movement is housed in treasury, and oversight is with audit. The forward-looking capital decision resides within FP&A.

Once you have a mission statement, define the FP&A function using these six steps:

  1. Determine the services and activities you do and will offer going forward.
  2. Determine where the work will be performed, e.g., centralized HQ.
  3. Define the communication model for how interactions with FP&A will occur.
  4. Define roles and responsibilities.
  5. Define skills and talents.
  6. Develop FP&A sizing and validate against best practices.

For more information about each step, see the AFP guide “ How FP&A Can Become a Better Business Partner,” underwritten by Workiva.

Deploy technology that enables business partnering.

The aim of technology in FP&A is to support faster decision-making and deeper insights. Technology is important to business partnering for two reasons:

  1. It automates repetitive processes and reroutes the flow of information, freeing up FP&A’s time to focus on strategic tasks.
  2. It adds new capabilities and puts self-service tools in the hands of business units and functions, creating an environment for finance to have more in-depth conversations with the business.

A leading practice for integrated planning systems is integrating and consolidating all base planning requirements domains. This creates a single version of the truth for the strategic plan (long-range plan), annual budget, and periodic and ad hoc forecasting. Planning domain areas include market demand, revenue, operational expenses (including labor), capital expenses, projects, profit & loss statements and all financial statements.

Integrated planning systems enable driver-based modeling and trend-based planning. They also provide a direct linkage to satellite models using consistent, measured and validated assumptions. Additionally, they support “what-ifs,” i.e., sensitivity analyses, simulations, scenario planning, stress testing, contingency planning, actionable operational playbooks, etc.